When Do You Need a Business Dispute Attorney?

Are you contemplating whether or not you need a business dispute attorney by your side? There are first key factors to know.

Read further on.

Introduction

Running a business can be rewarding, sure – but it can also be challenging. There are decisions that need to be made, some requiring an instantaneous response, that can impact the business as a whole. With the rewards and the risks, sometimes a business dispute may arise – and it is usually a feud with a partner (or partners).

Quite often, business disputes can be handled quite easily with everyone coming to an agreement. Other times, though, not so much. When an amicable solution isn’t found, the time comes when legal counsel should be involved. Knowing when to take the leap and hire an attorney is important to protecting your business.

What is a Business Dispute?

It is important to note that a misunderstanding between partners does not often constitute a business dispute. When you are running a business with others, conflict is going to arise. Everyone is not going to agree on everything, every time. And, if we’re being honest, running to an attorney every time there is a small miscommunication can lead to bigger problems down the road.

Setting yourself up for success, in the beginning, is a great place to start. This means having the proper contracts and plans in place so that when a resolution is needed, it can be easily handled. For those situations where a solution cannot be found, there is no contract or plan in place to tell you what to do, it may be necessary to call in an attorney.

Situations That May Require A Business Dispute Attorney

When Small Claims Get Out of Hand. As we said, issues and disputes are going to arise. You will want to handle them as best as you can. However, if a dispute begins to get too out of hand or it threatens your role in the business – or the business itself – it is time to reach out to a business dispute attorney.

There is Attorney Representation on the Other Side. If you are in the middle of a dispute, whether you think it is minor or not, and the other side retains counsel, you need to do the same. You will want to have the same leverage. When you are represented, your attorney will then handle all communications with the other party – and you will no longer have to.

A Rapidly Growing Business. Businesses can stay at the same level for years and then, for one reason or another, begin soaring in growth. When this happens, a lot of disputes can arise – especially since you will now find yourself in new territory. If contracts, guidelines, or agreements are not in place addressing issues like mergers, growth, and all things that impact larger companies, then you will need an attorney to address this – as well as any disputes about which direction the company is now headed.

Everyone should have a clear picture of the forward progression, as well as know their roles.

Clarification of Legal Documents. You may have taken the right step and had all the contracts and agreements and the like drawn up when you started your business. Unfortunately, as much as this has probably helped along the way, some business disputes can step from not understanding a particular document (or part of it) – or even different interpretations as to what it means. Rather than trying to battle it out, seeking a business dispute attorney is a great way to get an expert opinion and clarification – and bring closure to the dispute.

Violation of Fiduciary Duties. According to the laws in California, business partners have fiduciary duties and obligations they must fulfill. These apply to the business you both run, but can also impact certain business opportunities they may take on outside of your company.

The fiduciary duties that each party or shareholder of a company are obligated to uphold are:

• A duty of loyalty. Interests of the business need to come first, rather than looking to enrich oneself at the expense of the business.
• A duty of care. Be careful and non-negligent with actions and decisions concerning all areas of the business.
• Duty of obedience. Shareholders and partners are expected to fulfill their roles to the best of their ability – and make a good faith effort doing so.

Having a clear understanding of these duties is important – and an attorney can help. After all, a partnership dispute that could have been avoided can be a big threat to your business. If any one of your partners or shareholders has violated their fiduciary duties, legal counsel can help you proceed in determining the best step to take next.

Disputes Over Financial Matters. When it comes to money, disputes can turn ugly real quick. Sometimes there is concern over how funds are used, cash flow issues, future growth and investments, and more. When these are brought up, it is not uncommon for disputes to arise. But, since money is vital for business success, any disputes over financial matters should be handled by a business dispute attorney. This will help you to maintain the overall health of the business.

The Role of a Business Dispute Attorney

Business dispute attorneys can help with all sorts of business disputes. They will review the details of the claim, investigate the situation, and then work to help both parties reach an agreement. The attorney will point out the various legal aspects surrounding the situation and ensure that your rights are protected along the way.

Even though you have taken steps to have contracts in place in advance to protect yourself and the business from any major disputes, the day will come when you will inevitably be dealing with one – whether it is about your finances, a breach in fiduciary duties, a rapidly growing business, questions over legal documents, or something else. And, when it does, it is important that you seek legal counsel. You will want a favorable outcome so that you can focus on your company. A business dispute attorney can give you that.