Actions might be taken against fellow partners, because of their breach of their statutory or fiduciary duties, or for breach of the terms of the partnership agreement.
Frequently, disputes arise because one or more partners consider that another partner is not pulling their weight, or is taking an unfair share of profits.
This in turn may lead to one or more partners leaving the partnership either by serving notice, or by expulsion.
This may lead to a claim for damages or other relief, for example:-
- an account of profits;
- forfeiture of fees;
- compensation for losses caused to the partnership for breach of fiduciary/contractual duties;
- an injunction preventing certain actions occurring.
Outgoing partners will seek to enforce their right to be paid all profits rightfully due to them under the terms of the partnership agreement.
Many partnership agreements will contain a clause which gives the partnership/other partners the right to expel a member (regardless to the fact that the member is not in breach of any provision of partnership agreement) if the majority of the members think that it is in the best interests of the partnership to do so.
Indeed there is a growing trend towards the inclusion of such power within partnership agreements, which is often used in the case of underperforming partners and/or where there is a personality clash.
The courts will be concerned to see that where such a power is exercised, it is exercised in good faith. So it should not be exercised for the personal benefit of one or more partners or for reasons unconnected with the business.
Where there is an underperformance or a personality clash and in either case it is detrimental to the business, then the exercise of such a power may be upheld.
However, in exercising such a power, principles of natural justice will apply in that proper investigation needs to take place and the member who is to be expelled must be given a right to address concerns, to be heard upon them and to make representations.
We provide assistance to partners leaving a partnership, in connection with their rights and entitlements as partners, and the processes to be followed in connection with any termination, suspension, retirement or expulsion.
Another area of potential dispute as between partners is unlawful discrimination.
Partners are not employees, and consequently do not have the protection of the Employment Rights Legislation.
However, they are protected against unlawful discrimination on the grounds of:
- Marital Status
- Civil Partnership
- Gender Re-assignment
- Pregnancy or Maternity
- Sexual Orientation
- Religion and Belief
The partners may agree as between themselves in the partnership agreement to provide further rights - for example the right to maternity leave, and to paternity and parental leave.
Historically, partners have tended to be tough on their fellow partners when dealing with maternity leave and pay provisions. Some partnerships deal with this by providing that during any maternity leave profit share remains the same, but the absent member will bear the cost of locum cover during the maternity leave.
Disputes between partners can also arise on the dissolution or winding up of the partnership.
In all situations, we are able to offer practical advice from a commercial point of view, seeking to resolve disputes by negotiation and using alternative dispute resolution processes such as mediation or arbitration. If necessary we are able to provide representation for clients in any necessary court proceedings.
Contact us today to talk about your partnership issue with one of our specialist business services solicitors
Please call 0800 916 9052 or email firstname.lastname@example.org. Our business services solicitors operate from offices across the country and can offer immediate and accessible representation anywhere in the UK.