7 Key Considerations When Settling a Shareholder or Partnership Dispute in Florida

Disputes between shareholders or partners can have wide-reaching implications. Not only can they have direct impacts on the shareholders or partners involved, but they can also indirectly impact other owners as well as the business’s employees and customers. As a result, when disputes arise, a strategic approach to dispute resolution is critical. This makes working with an experienced Miami shareholder dispute attorney critical as well.

In many cases, negotiating a settlement will be in the best interests of all parties involved. Generally speaking, this will keep the business intact, and this will allow the business to continue providing jobs while also continuing to meet its customers’ needs. When working toward settling a shareholder or partnership dispute, it is important to keep all relevant interests in mind—while also keeping in mind that both sides retain the ability to go to court if necessary.

Factors that Require Careful Consideration When Working to Resolve a Shareholder or Partnership Dispute

Given these interests, what are the factors that warrant consideration when settling a shareholder or partnership dispute in Florida? Here are seven key considerations:

1. Ownership and Control Going Forward

With any shareholder or partnership dispute, one of the key issues involved is how to address ownership and control of the business going forward. Will all of the business’ current owners retain their ownership interests going forward? Or is it in the business’ best interests for one or more of the current owners to part ways?

These aren’t easy questions to answer, and when separation is warranted, shareholders or partners may have very different opinions about who should stay and who should go. But, a swift decision will often be necessary, and all of the business’s owners must ultimately focus on the business’s best interests going forward.

2. Fiduciary Duties During the Settlement Negotiation Process

This brings up another important point: When facing an internal dispute, partners and shareholders remain bound by their fiduciary obligations. When acting in their capacity as owners, partners, and shareholders must generally act with the business’s best interests in mind.

If a partner or shareholder breaches his or her fiduciary obligations during the settlement negotiation process—for example, by letting conflicting interests guide their decision-making—this can both complicate the dispute and increase the likelihood that the dispute will lead to litigation. Conversely, when the partners or shareholders involved in a dispute make a point of focusing strictly on what is best for the business, this can often help facilitate productive settlement negotiations.

3. Non-Competition and Non-Solicitation Obligations Post-Separation

If the decision is made to part ways, this will give rise to an entirely new set of considerations. For the partner(s) or shareholder(s) who are leaving, this is when the focus will generally shift, in part, to protecting their own personal interests going forward.

For example, in this scenario, it is fairly common for the departing individual(s) to be subject to non-competition and non-solicitation obligations. Non-competition obligations restrict former partners and shareholders’ ability to start (or work for) competing businesses, while non-solicitation obligations restrict former partners and shareholders from contacting the business’s customers.

The scope of these restrictions is often the subject of intensive negotiations during the settlement process. While the business’s remaining owners will want these restrictions to be as comprehensive as possible (subject to applicable legal limits), those who are departing will want as much freedom and flexibility as they can negotiate. Striking the right balance requires informed and practical decision-making on both sides, and this is one area—among many—where the insights of an experienced Miami shareholder dispute attorney can be invaluable.

4. Using Mediation to Come to Terms

When disputing partners or shareholders share a common interest in reaching a settlement but are not able to come to terms on their own, mediation can be a highly effective tool. In mediation, the parties and their counsel work with a neutral third party (the mediator) whose role is to offer potential solutions and help facilitate continued good-faith negotiations. If preliminary negotiations are unproductive or appear to be breaking down, pursuing mediation promptly could help prevent the dispute from resulting in litigation.

5. Enforceability and Dispute Resolution

When negotiating a settlement, it is important to focus not only on the terms of the settlement itself but also on the potential need to enforce the settlement in the future. If another dispute arises, what rights will each party have to enforce the terms to which they have agreed? This is a concern whether the parties remain as co-owners of their business or decide to part ways—and it is a concern that warrants consideration regardless of whether the parties are amicable at the time of settlement.

6. General Terms of Settlement

While any settlement agreement should be custom-tailored to the circumstances at hand, there are some general terms that will almost always be necessary to protect the interests of the parties involved. While often dismissed as “boilerplate,” these terms can be critically important—especially if another dispute arises down the line.

7. The Risk of Future Disputes and Litigation

While partners or shareholders who are facing a dispute will often focus on the business issues immediately at hand (and understandably so), addressing the risk of future disputes and litigation is equally important. If future disputes are likely, this is a factor that warrants serious consideration during the settlement negotiation process. Even if the parties to a partnership or shareholder dispute decide to go their separate ways, future disputes could lead to additional costs and business disruptions—and these are risks that can (and generally should) be mitigated through the terms of the parties’ settlement.

Schedule a Call with a Miami Shareholder Dispute Attorney at Edelboim Lieberman Today

Are you facing a shareholder or partnership dispute in Florida? If so, the attorneys at Edelboim Liberman can help, and we invite you to contact us for more information. To schedule a call with an experienced Miami shareholder dispute attorney as soon as possible, please call 305-768-9909 or inquire online today.