Dispute Resolution - Disputes and issues affecting firms and LLPs

Partnership and LLP disputes cannot always be side-lined or quickly resolved. They can cut to the very heart of the business, affecting not only the trust between the partners or members, but also financial performance, goodwill and reputation.

A large proportion of partnership and LLP disputes concern rights and liabilities following retirement of a partner or member, upon expulsion, or following a dissolution or winding-up, and often give rise to accounting, contribution and indemnity issues.

Other disputes emerge whilst partners or members are still working together, either gradually because of divergent agendas, unequal contribution, profit-sharing issues or uncertainty or disagreement as to the future of the firm or LLP, or suddenly as a partner/member or group of partners/members announce their intention to defect with clients to another firm, or a partner or member is caught with his hand in the till.

In all cases a moment arrives when the main body of partners or members realise that they must do something. And yet the complexity of the provisions of the Partnership Act 1890, or the Limited Liability Partnerships Act 2000 and the accompanying Regulations, and the often arcane case law that has been handed down in the two centuries before and after the Partnership Act (which may or may not, depending on the circumstances, be applied to LLPs), can make decision-making difficult. This may be a critical time, in that the wrong move can in some circumstances lead to disastrous and expensive consequences, including inadvertent dissolution of the firm, or the creation of grounds enabling a member to apply to wind up the LLP, or to apply for unfair prejudice relief under the Companies Act 1985.

Often a bank, landlord or other third party is involved. We have considerable experience of dealing with partnership disputes, and more recently have started dealing with some of the first LLP disputes, both in seeking to resolve them by way of negotiation or mediation, or if necessary prosecuting them by way of court proceedings or arbitration.

We regularly advise on such disputes arising out of:

• Retirement
  
  
• Dissolution and winding up
  
  
• Expulsion
  
  
• Fraud, misrepresentation and bad faith
  
  
• Breach of non-competition covenants
  
  
• Insolvency

We have also represented firms in disputes or negotiations with banks, landlords and others, and the same experience can equally be applied in respect of LLPs. Our clients include solicitors, accountants, surveyors, actuaries, doctors, farmers, restaurateurs, musicians and others practising or trading in partnership or as LLPs.