Partner and Cofounder Dispute Resolution
Most dispute work we handle is for partners/founders who have gotten off-track. Those are not the only types of disputes we handle, although it’s a sweet spot for us.
Sometimes despite your best efforts, a business relationship with a cofounder or partner goes south. Sometimes the relationship can be saved and other times it can’t. If things are quickly getting nasty, it’s a good idea to have someone in your corner, representing your interests.
Occasionally we will represent a partner or cofounder in a dispute with their other partner(s) or cofounder(s). Other times, we represent the company in a situation where a partner or cofounder has gone rogue.
Step one to resolving partnership and founder disputes starts with looking at the founder and corporate governance documents. These documents, when properly drafted, will explain how to handle disputes. Founder documents carry all sorts of names, depending on the type of business entity and the overall structure of the partnership relationship. Documents we are typically looking for may be called:
- Partnership Agreement or Limited Partnership Agreement
- Shareholders Agreement or Stockholders Agreement
- Bylaws of a corporation
- Founders Agreement or Cofounders Agreement
- Company Agreement, Operating Agreement or LLC Agreement
- Stock or Share Purchase Agreement or Vesting Agreement (or Equity Vesting Agreement)
If you need a law firm to help you navigate a dispute, to enforce your rights and have you back in a partnership or other founder relationship gone bad, we can help. You can reach us at 512.888.9860.
Other times, you don’t need your own legal counsel to protect your specific interests. Sometimes you and your partner need an impartial person to help you work through your partnership disagreement. In this context, mediation is a great tool.
Partner and Cofounder Mediation
If you are having problems with your partners or cofounders and you are not able to work things through amicably, there are a few options available to you. Among them are litigation, arbitration and mediation.
Litigation and arbitration are rarely preferred approaches. Litigation is a necessary tool at times, although both parties often end up coming away from litigation feeling that they lost. Litigation is slow, expensive and decisions from courts and juries are not perfect – they make decisions without knowing absolutely everything that happened and without full knowledge of the relationship that is affected. And, it’s not the job of a judge or jury to help preserve the relationship. Arbitration is often just as expensive as litigation and it just as acrimonious. They are both poison to relationships, not to mention your wallet.
Mediation is a much quicker, simpler and less costly option. Many business disputes can be mediated in a half-day session, others in a full day mediation. Since mediation is collaborative, whereas arbitration and litigation are adversarial, mediation requires each party to participate fully and openly. Otherwise, it’s a waste of time, which is why some attorneys don’t like it. My experience is that it is a very good use of time and money. Sometimes what people really need is time to tell their side of the story and a neutral person to give some thoughts and insights and to encourage repairing and saving the relationship. If you and your partner are willing to talk and to try to work things out, mediation is a great tool.
My structured mediation process is based on a unique and proprietary philosophy. I believe that the most effective mediation involves the parties working together in a non-judgmental environment. In one my mediations, you and your partner will each have an opportunity to present your point of view to each other and to me. I will encourage you to talk to each other, focusing on facts and the impact events had on you, rather than slinging accusations and demands at your partner. I will also spend a significant amount of the mediation with you each separately. I always read the mediation briefs and come prepared with intelligent questions aimed at getting each side to flesh out its position. You can attend a mediation with your legal counsel or without.
Some business partners want me to decide their issue, basically to serve as a judge or referee. I am willing to do that under certain circumstances. My decision is not binding on the parties in the way that litigation or arbitration would be, although for business partners that want to work things out and just need an impartial decision-maker, my dispute referee services may be the perfect solution.
We don’t litigate a lot. Candidly, we don’t love the litigation process. In our opinion, it is a tool of last resort. That said, sometimes it’s the only tool in the toolbox. While we will do everything we can to assist you in resolving a dispute pre-litigation, if it goes to litigation, we may be willing to represent you. The cases we take on tend to have one thing in common – our client has been mistreated. We are a champion on the underdog and we love a good fight if the cause is worthy. This doesn’t mean we only take on cases we think we’ll win. That’s not a concern. Yes, of course, we prefer to win and we don’t generally recommend clients litigate if they don’t have a good position, but we are way more interested in the merits of the matter. Recent presentative litigation matters we’ve handled include:
Representing the plaintiff Intentional/knowing copyright infringement matters
Representing the small business defendant against a much larger, national company attempting to enforce an over-reaching and (in our opinion) entirely unjustified restriction on competition (we hate restrictions on competition and the manner in which larger companies regularly apply them)
Representing an equipment supplier against a vendor who leased equipment, never paid for it, and went MIA
“Cenkus Law’s approach to handling partner and founder issues is very relational. It’s not soft. It’s just respectful for the emotions of the parties. I have seen him in action and it’s impressive. Even if the business relationship can’t be saved, their approach will help you achieve your goals in unwinding the relationship. He knows the law. More importantly, he understands people.” – Rudy R., Business Owner (Houston, Texas)
If you’ve been mistreated, we may be willing to represent you. Let’s talk. If we are willing to take on your case, we will give everything we have to get you a just result.