Search Blog
March 2014
« Feb   Apr »


How To Protect Yourself In A Shareholder Dispute Or Partnership Dispute


Disagreements about the direction and management of a business can happen even in the most carefully planned business.

HOUSTON, TX, March 31, 2014 /24-7PressRelease/ — Most business owners and entrepreneurs expect that disputes will happen with other businesses, clients and even employees, but usually do not expect disputes with their other shareholders or partners. Unfortunately, the frequency of serious shareholder disputes and partnership disputes may be a surprise to you. You probably chose to work with your fellow partners, shareholders or co- owners for a reason. Perhaps you have complementary skill sets or assets. Maybe you are family members or close friends.

Even among the closest of business partners, serious disagreements about the management and direction of a business happen. These disagreements can damage relationships, end in business divorce and result in lengthy litigation. As soon as you are aware of growing dissatisfaction or a dispute that could deepen, you should take steps to protect yourself. You should contact an experienced business attorney to find out your rights and ways to resolve the dispute, and you should take other steps to protect yourself.

Keep Information In A Safe Place

Disputes and disagreements can escalate quickly. Shareholders or partners may go to the office one day and find the locks suddenly changed or access cut off to bank accounts, computers and information. Entrepreneurs and business owners should keep copies of important business documents at home or another location away from the business.

As a shareholder or partner, you should keep copies of important business agreements and documents that you can access even if you are unable to go to your business office. These documents include:

– Organizational governing documents. These could include a shareholder agreement, a partnership agreement, buy-sell agreement or another type of agreement that details how a business is structured and potentially how disputes will be resolved.
– Bank account information. Do you know where the bank accounts are and how to access them? Business partners in a dispute have moved accounts, changed accounts or taken other actions that can leave their partners without access to the funds they need to carry out daily business operations.
– Restrictive covenants and personnel handbooks. Does your organization have a noncompete agreement or other agreements that limit competition if you or another person leaves? Keep copies of these agreements, personnel handbooks and similar documents in a safe place.

Keeping these documents in a confidential and safe place will help you continue operations in the event of a serious rupture in your business relationship. It can also help protect your legal interests because you will have important evidence available as soon as you contact your attorney.

If your business or shareholder dispute has escalated and you are unable to retrieve documents, your attorney can take certain steps and can even use the court to give you access. But you will save time and expense if you are prepared.

Your Conduct Matters

Your conduct during a business dispute can affect your case. For closely held businesses and partnerships, disagreements about the management of a business or its direction can be high stakes and intensely personal. Before you act, consider what a judge or jury would think. Before you talk about the dispute, remember that your words could affect litigation or resolution of the issue.

You can improve your position in a dispute by:

– Listening to your employees: Know what your key employees are doing and how they are doing. Have conversations with them about your business and find out what’s happening.
– Communicating with clients: Generally, you should not discuss your legal dispute or disclose confidential information to your clients. But you should stay in contact with your clients and maintain a good relationship with them.
– Keeping information confidential: If you are involved in a legal dispute over your business, you should not discuss the dispute with your employees, your clients or your business partners. Telling others about your legal dispute may let the opposing party know what you are doing. If you discuss information your attorney gave you, you may also waive your attorney-client privilege. That means the conversation you had with the lawyer would no longer be private.

If you are involved in a business dispute, the best way to protect yourself and your assets is to begin working with an attorney as soon as possible. An attorney with experience in business law can tell you how to protect your assets and can develop strategies for resolving your dispute.

Contact Kerr, Hendershot & Cannon

If you are involved in a shareholder or partnership dispute in Houston or elsewhere in Texas, contact the experienced business attorneys at Kerr, Hendershot & Cannon. We can help you protect your business interests while resolving your dispute. Call 713-893-1668 or visit for more information.