Options for Resolving Partnership Disputes

Litico Law Group
Two businesspeople standing face to face partnership dispute attorney

When partners start a business together, they have the best intentions — and rarely expect conflict to arise. Unfortunately, there are many reasons partnership disputes can occur during the course of doing business. Differences of opinion, misconduct, or a partner’s disregard for their obligations are all situations that can place a business in jeopardy. If you are facing a conflict in your business, it’s essential to have a skilled partnership dispute attorney by your side who can help you achieve a favorable outcome.

What Is a Partnership?

A partnership is an arrangement entered into between two or more people to conduct business for the purpose of making a profit. It is a legal entity that is separate from the individual partners. The partners share ownership and responsibility for managing the company’s operations — but partnerships can also come with a certain amount of risk if a partner fails to act in the best interests of the company.

Notably, there are three types of partnerships from which business owners can choose, based on their goals. These include general partnerships, limited partnerships, and limited liability partnerships. Liability protection, tax implications, and operational needs should all be considered when determining the type of partnership that would be most beneficial.

Reasons for Partnership Disputes

If you are facing a partnership dispute, it’s essential to have a skilled partnership disputes attorney by your side who can help you achieve a favorable outcome. Litico Law Group offers diligent representation and high-quality legal services in Illinois for a wide array of business matters.

Partnership disputes are often complicated and can significantly disrupt a business. They can occur due to disagreements over the direction of the company, a breach of fiduciary duty, and misappropriation of assets. Other common reasons for partnership disputes can include the following:

  • Fraud
  • Disagreements regarding sale of the partnership
  • Breach of contract
  • Violation of non-compete agreement
  • Misuse of trade secrets
  • Violation of non-solicitation
  • Authority disputes

Importantly, under the Illinois Uniform Partnership Act, partners can be held jointly and severally liable for the partnership’s obligations. Since each partner is independently liable for damages incurred in connection with another partner’s tortious act, disputes can become extremely contentious.

How Can Partnership Disputes Be Resolved?

Because there is so much at stake, partnership disputes can place a business in peril. It’s crucial to ensure these types of conflicts are handled as quickly as possible to avoid disruption to a company and damage to its bottom line. Apart from pursuing litigation, there are several ways partnership disputes can be resolved.


Depending on the facts and circumstances, mediation may be able to help resolve a partnership matter efficiently and cost-effectively without having to resort to litigation. This is a form of alternative dispute resolution that takes place outside the courtroom and utilizes a neutral third-party to facilitate communication between business partners. Agreements reached during mediation are typically binding on the parties involved and can also help to preserve the business relationship in the event the partners choose to move forward with operations.


Should business partners no longer be able to work together — but they want the business to continue — one or more partners may buy out the others. If a buy-sell agreement was entered into at the time of the partnership’s formation, the procedures in the document should be followed to determine the steps that should be taken. Absent such an agreement, the business should be appraised in order for the parties to have an understanding of their interests and negotiate the best possible terms. Alternatively, if none of the partners wish to continue running the business, partners may sell-out their interests to new owners.

Dissolution of the Partnership

If it is apparent that the business relationship cannot be repaired, dissolution may be the best option to pursue. When partners voluntarily agree to end the company’s operations, dissolution can be relatively simple. Typically, the process involves filing paperwork, paying off creditors, selling any assets, and distributing proceeds in accordance with the interests of the partners. However, if not all partners wish to dissolve the business, it may be necessary to seek judicial dissolution by filing a lawsuit.


Sometimes, the financial circumstances of a business may leave no other viable option than bankruptcy. If the partnership’s debts are greater than the assets, partners may consider filing for a full liquidation under Chapter 7. In some cases, a partnership might be able to file for a debt restructuring under Chapter 13, which would allow the business to continue.

Can Partnership Disputes Be Prevented Before They Arise?

The best way to prevent partnership disputes is to prevent them before they happen. One way of doing this is by adopting a partnership agreement that clearly specifies the roles and responsibilities of each partner, as well as how profits will be distributed. The document should also address all potential scenarios that could arise, including those involving a partner’s incapacitation, intellectual property rights, and how disputes will be resolved when they occur.

Contact an Experienced Partnership Dispute Attorney

If you are facing a conflict in your business partnership, it’s essential to have a skilled business attorney or partnership dispute attorney by your side who can help you achieve a favorable outcome. Located in Rolling Meadows, Litico Law Group offers diligent representation and high-quality legal services in Illinois for a wide array of business matters, including partnership disputes. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can assist you.

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