Category: Blog Post

I can’t believe how deceitful Steve has been!

Andrew Marsden

Have you ever been in a position where you’ve discovered your business partner is ‘moonlighting’ behind your back? It’s not an easy place to come back from – trust is lost, reputations damaged and it can be the beginning of the end for many business relationships.

If this resonates with you and you’ve got a ‘Steve” in your business, you’re not alone; it’s actually a fairly common occurrence and something I see a lot of in my day-to-day work.

While it can be a really painful, frustrating and unsettling situation to find yourself in, there is hope; usually even the most acrimonious of situations can be resolved with the benefit of specialist and experienced advice and support. 

Of course, with emotions running high it can be very difficult to see a clear path and even knowing where to start can be overwhelming. So, what are your options?

1. Enlist the help of an experienced specialist

When you’re embroiled in a feud with a business partner – particularly one that is fuelled by strong emotion – don’t try to battle it out on your own or with inexperienced or non-specialist legal advice. This very rarely works out for the best! Disputes can quickly deepen and the greater the conflict between two parties, the less chance there is of resolving differences and enabling both sides to walk away amicably or at least satisfied. Right from the start, get the best advice you can. The best source of such advice is often an experienced, specialist barrister. They will be able to advise you on the best and most effective path to take. You can do so under the Bar Council’s Direct Access scheme without having to engage a solicitor and so substantially reduce the costs involved.  In doing so, you will no doubt save yourself a lot of time, stress, worry and, potentially, money.

2. Check the terms of your company’s articles of association and any shareholder’s agreement or your partnership/LLP agreement

The terms of your articles of association, shareholders agreement, partnership or LLP agreement can be incredibly effective in providing routes to a resolution. If they have been carefully drawn up they should provide mechanisms for resolving disputes cheaply, effectively, efficiently and with the least possible damage to your underlying business and its value to you. I always recommend having such agreements in place from the outset. If you haven’t got such agreements in place, do not delay. Get them put in place as soon as possible and well before any dispute arises. Again, speaking with an experienced, specialist barrister will ensure you are protected should the worst come to the worst. 

3. Use effective negotiation and mediation to try and resolve any dispute and avoid litigation

More often than not properly prepared for and conducted negotiation or mediation should be capable of resolving disputes without resort having to be had to any actual litigation; even where things might seem beyond repair. I always try to ensure that a sensible and fair compromise is reached with both parties being able to walk away satisfied even if relationships might not always remain fully intact. Litigation should really be considered the last resort.

4. If legal action is required then go ahead and take it!

If a dispute cannot be resolved without it then don’t be afraid to turn to litigation. For example, the courts have power under section 994 of the Companies Act 2006 to grant relief where the affairs of a company are being conducted in a manner unfairly prejudicial to some of its shareholders and, where it is appropriate to do so, you should use it. But just make sure you use it when it’s right to do so, that it doesn’t come back to bite you and that you don’t end up regretting it. Again, turn to an experienced and specialist barrister. When my clients instruct me under the Bar Council’s Direct Access scheme they are often surprised by how effective it is and how reasonable the legal fees are compared with using a solicitor. Certainly, a good barrister should ensure you are well informed, well prepared, confident in any litigation and be transparent about the costs involved. And remember, never be afraid to ask questions; if anything is unclear or simply doesn’t feel right then demand an explanation.

What are your options?

Finding yourself in the midst of a business dispute is never fun or easy; particularly if there are feelings of resentment and ‘wrongdoing’ involved. Don’t try and fight your way through by yourself – even if you are not sure whether action is needed or just want to find out what your options are, please do get in touch with me. 

I offer a free thirty-minute initial consultation and I’m sure I can give you some helpful guidance as to the best way forward.

How should we set up our new business?

Andrew Marsden

If you’re about to start a new business venture or you want to change your existing company structure, you might be wondering about what will work best for your specific situation.

When it comes to structuring your business there really isn’t ‘one size fits all’.

It isn’t a decision you should make in haste; choosing the right business structure can be pivotal as it will determine what responsibilities, liabilities and options you have in the running of your business. 

It will also dictate what paperwork you need in order to protect your interests; particularly if you are going into business with other people. Though the unravelling of a relationship may be the last thing on your mind when setting up your business it really is a crucial aspect that needs to be considered right from the outset!

The path to resolving any dispute that might arise in the future will depend upon the type of business structure you have decided to use and the agreements you have put in place to regulate it. So it’s important that you have chosen the business structure that is right for you and properly documented how its to be run and both now and in the future; including what should happen if things turn sour.

Sole Traders

The simplest of all structures, sole trader businesses are owned and operated by a single person. They can be appealing to a new business owner as they are easy to set up, involve minimal paperwork and require fewer start-up costs.

All profits made and assets owned belong entirely to the individual concerned; so an agreement on how profits and assets should be divided isn’t needed. Likewise, there is no need to spell out responsibilities as they all fall on the shoulders of that one individual. 

This simplicity comes with a couple of significant drawbacks. First, it’s not possible to operate as a sole trader if you want to go into business with other people. Secondly, the sole trader is personally liable for any business dealings and will personally have to meet any debts incurred and bear any losses that the business might suffer.

What I would just say in passing is that, with all responsibilities falling personally on the sole trader, it is generally advisable to make sure insurance policies and lasting powers of attorney are in place in case the worse happens. 

In practice, businesses often start out as sole traders but transition to another structure as the business begins to scale up

Partnerships

A partnership is one option if you want to join forces with other individuals and enjoy the shared ideas, talents, responsibilities, risks and rewards of running a business together.

Operating in this way can give more flexibility. Partners can come and go as the business develops and changes and you can share profits as you want. However, if a partner incurs any contractual debt in the course of the business all other partners are equally accountable. 

Financial and management issues are two of the most common causes of dispute between partners so if you decide to operate under a partnership it is crucial you draw up a partnership agreement at the very beginning to govern how profits, ownership and management are to be split. 

Being in business with other people presents the risk of disagreements over how the business should be run. Laying out these terms in a legally binding partnership agreement and discussing all elements from the start will put you in a much better position if you encounter a fallout later down the line. 

Limited Companies

A limited company is a  legal entity separate from its shareholders – it holds its own assets and contracts entered into on behalf of the company are generally its own responsibility rather than that of its shareholders or directors. There is less personal financial risk as liability is limited to the amount each shareholder has invested in the company. 

There is often fiscal and administrative cost in running a business through a limited liability company but the advantages offers by limited liability status generally far outweigh those costs

All limited companies in the UK must have articles of association – a constitutional public document that defines the basic rules and regulations of how the company is run and operates as a contract between the company and its shareholders. In addition, I always advise my clients to consider putting a shareholders’ agreement in place too. Unlike articles of association, a shareholder’s agreement is not a public document but a private contract instrumental in regulating the rights, responsibilities and duties of the shareholders.

If disputes occur, they are generally far simpler, quicker and cheaper to resolve if a shareholders’ agreement is already in place providing suitable mechanisms for the resolution of such disputes. 

If your business is based around high-risk products or services then a limited liability company can provide personal protection from or a sort of insurance against these risks which may help with peace of mind.

Limited Liability Partnerships

Last but not least, you might want to consider operating through an LLP. Many professional services businesses choose to do so and for good reason. Like the shareholders in a limited company, the personal liability of the members of an LLP is limited to the amount each member has invested into the LLP. Again, as is the case with limited companies, stakes in the business can be transferred relatively easily and profits can be divided between the members as they decide. The difference really is as regards the degree of public scrutiny which is less for LLPs than it is for limited companies.

When forming a limited liability partnership, again make sure you have a carefully drafted LLP Agreement in place to help govern things such as how decisions are to be made, who has what responsibilities, how profits should be split, how members can be appointed, retire or leave and how any disputes that might arise are to be resolved without damaging the underlying business.

At the end of the day, choosing the best structure for your business really comes down to your own specific circumstances, desires and your ambitions as to how you want your business to be run. No matter which business structure you choose, the most important thing is to have the right legal paperwork in place from the outset so that you – as the owner, partner, shareholder or member – are protected and your assets safeguarded.

To discuss this in more detail please do get in touch – I’d be very happy to have an initial conversation with you completely fee-free. Just give me a call on 07718 883094.

Falling out with my business partner – what next?

Andrew Marsden

“The day we started our business, we were such good friends; I thought this was it … we’d both be millionaires!

The business was really doing well – we had work coming at us from every direction.

And then, six years since we incorporated, almost imperceptibly, the cracks started to appear. The trust seemed to ebb away. Now, it has gone altogether, and I feel we are at war”.

The above is a scenario you probably never anticipated. When business relationships start out it can be difficult to envisage things ever turning sour. Why would you expect and plan for the worst to happen? The start of a new business venture is an exciting and motivating time. More often than not, business relationships are forged out of a passion and a shared vision of what can be achieved.

Unfortunately, things don’t always stay that way. Once the ‘honeymoon period’ is over, it’s quite common for cracks to start to appear. For some, these can be filled or at least papered over with little long-term impact but for others those cracks start to deepen. When that occurs, it can have serious consequences for you and your business.

Shareholders, directors and partners fall out for a multitude of reasons. Typically, these might involve the diversion of business opportunities or the misappropriation of funds or assets. Perhaps someone has been caught with their “fingers in the till”. Sometimes one person may feel they are being excluded or left out of business decisions. Such scenarios feel unfair and prejudicial. Though the cause of the relationship breakdown may differ from case to case, the route to resolution is what’s important here; and there are several key stages to getting there.

Do you have a shareholders’ agreement already in place?

I always recommend those involved in business together ensure that they have a properly prepared shareholders’ or partnership agreement in place from the outset.  It will help to define shareholder or partner responsibilities, assist in the smooth running of the business and provide a mechanism for effective resolution of any disputes that might arise. Perhaps even more importantly, the presence of a decent shareholders’ or partnership agreement can actually help reduce the chances of future conflict.

It may now seem like a far and distant memory but, when you first entered into your business relationship, did you actually enter into a shareholders’ or partnership agreement? Perhaps you were keen to have an agreement in place from the outset. You may have had one drawn up on a recommendation. You might simply have had one prepared because it felt like the right thing to do. 

If so, it is really important to familiarise yourself with its contents. It’s crucial you understand the details of any agreement that you have entered into and how it might affect or provide a route to the resolution of any dispute you might find yourself in.

Get experienced specialist legal advice 

Take legal advice early on. Engaging a specialist and experienced barrister might well be the cheapest and best way of ensuring that the route to resolution is as seamless and stress-free as possible. 

You can get advice from an experienced specialist barrister directly and without the cost of engaging a solicitor. Very often the fees of barristers, who face limited overheads that need to be covered, are substantially less than those of solicitors and you will be getting advice straight from the “horse’s mouth”.

A specialist and experienced barrister will be able to identify any provisions in a shareholders’ or partnership agreement (including any concerning the exit of a participant) that might assist you. Your barrister will be able to give you a clear understanding of what impact they may have and advise on the next steps to take to achieve a resolution.  

What might those next steps look like?

Commonly a shareholders’ or partnership agreement will include provisions that can be used to resolve such disputes or will, at least, set out procedures for doing so. 

Typically these might require one shareholder to sell their shares, cease to be a director and leave the company. But the process of removing a shareholder/director from the business can be complex and great care is required to avoid it backfiring. Again, a specialist barrister will be able to advise as to the options available and the procedures to be followed. 

While complications can arise, having one shareholder walk away from the business receiving a fair value for his interest can often be the most straightforward solution. Indeed, in my experience, shareholder disputes can often be resolved in this way quickly, at a limited cost and in a way that minimises disruption and damage to the business.

What if there is no agreement in place?

A surprising number of businesses don’t have any shareholders’ or partnership agreements in place. If you are in that position, all is certainly not lost. 

Again seek early specialist advice from someone experienced in the resolution of these disputes who can guide and navigate you through the process towards resolution.

Initially, you will need to consider negotiation or mediation as strategies to try to achieve workable compromises while keeping relationships as amicable as possible. Your barrister should advise you on the best approach to take and what you might realistically hope to achieve in your particular circumstances. It is nearly always preferable, from time, money and minimal business disruption perspectives, to achieve resolution in this way rather than through the courts.

In other cases, litigation may be inevitable. It may be the only way to achieve a resolution. It may provide the catalyst that gets everyone talking sensibly. Generally, this begins with pre-action correspondence which may itself lead to resolution early on. If not, it may be necessary actually to issue proceedings and follow the litigation process, which involves an exchange of statements of case, disclosure of documentary evidence, the provision of witness statements and expert evidence and, eventually, if necessary, a trial and a determination by a judge. However, it’s important to be aware that settlement can be achieved at any time during this process, and very few cases actually go so far as reaching a trial and a determination by a judge. 

Once again, you should turn to a specialist and experienced barrister who will work with you throughout the entire process from start to finish and ensure that a shareholder or partnership agreement is in place or not, your dispute is resolved amicably, on the best terms and as cost-effectively and as efficiently as possible.

To find out more, please get in touch by calling me on 07718 883094 or emailing andrew.marsden@commercialchambers.org. A thirty-minute initial conversation won’t cost you anything and I’d be very happy to talk you through the options available and to advise on the best route to take.

I can’t believe my friend and fellow director is cheating on me

Andrew Marsden

It’s always a risk going into business with a friend, and that gut-wrenching feeling when you discover they have been cheating on you is really palpable.

Perhaps you have discovered that an unexplained sum of money has been leaving your company bank account on the same day each month.

Or it might be that you have been increasingly aware of conversations going on and decisions being made behind your back.

For any director of a company, that will be a hard pill to swallow. It can be both hurtful and demoralising to think that your working relationship isn’t as strong as it once was. Of course, it’s not only the shareholder relationship that will suffer; your business could be impacted quite significantly too! 

The good news is a route to resolution can generally be found even in the most strained of circumstances. The success of this resolution will largely come down to what steps you take in the wake of the fallout and who you engage to assist with it.

Dealing with a fallout

When you’ve had someone cheat on you behind your back – whether that’s in work or in a personal relationship – there are generally two ways to move forward.

The first is to get emotional and upset and try to make the wrongdoer “pay” or to try to get “even”. 

The other is to think logically and practically; taking a far more proactive approach. This will almost always offer a more favourable conclusion in the long term. 

It can be very easy in the first instance to let emotion take over and lead your actions. It’s understandable, particularly when someone close to you has breached your trust. However, it’s important that this doesn’t cloud your judgement or impact negatively on your chances of resolving the dispute on the best terms available and so that everyone can walk away amicably or, at the very least, satisfied with the outcome.

What outcome are you looking for?

This is the key question to ask yourself when you are in the midst of a conflict with a fellow shareholder. Getting “even” may be the tempting option but is it really the goal here? Take time to sit down and reflect on what outcome would be best for you in this situation.

Do you want to buy out your fellow shareholder from the business and have them cease to be a director?

Do you wish for yourself to be able to walk away from the business in exchange for a fair value for your shares?

Having a clear goal will help define your route to resolution and the best steps to take to achieve it. A specialist barrister should be able to talk you through the process and advise on what, realistically, is achievable.

In my experience, often the most straightforward, efficient and cost-effective way to resolve disputes is to have one shareholder leave the company receiving a fair price for their shares. That being said, it has to be done in the right way; simply excluding a shareholder or director from the business can be potentially damaging. 

This is not to say it isn’t an option, but a barrister experienced in these disputes should be able to clearly lay out the options for you and to explain what is involved at every stage of the process. Ultimately, they should help to ensure you are in the best possible place to make an informed decision on what is right for your situation.

The path to resolution

  • Having the right paperwork in place: If you already have a shareholders’ agreement in place, this will likely include provisions that can be used to help reach a resolution. For example, a shareholders’ agreement might contain terms that permit you to force a shareholder to sell their shares. Again, care needs to be taken in enforcing such provisions, and a barrister with specialist experience can help you iron this detail out. If you don’t have a suitable shareholders’ agreement, then it is certainly worth one put in place before any conflict or dispute arises. Even if you have no shareholders’ agreement in place you will have articles of association the terms of which might also assist in finding the appropriate way forward.

  • Access to specialist legal advice: Getting advice early on about your legal rights is the best way to ensure that disputes don’t escalate and that the path to resolution is as straightforward and pain-free as it can be. It is generally preferable to resolve disputes by using negotiation strategies or through engaging in mediation where possible. Again, your barrister can assist with this; trying always to ensure that sensible compromises are achieved while keeping relationships as intact and as amicable as possible. Of course, if things can’t be resolved via mediation, litigation through the courts may have to  be considered as a final resort. Rest assured that if this is the route you end up taking, the right barrister will provide support throughout the process and keep costs transparent so that you enter into proceedings well-prepared and confident.

For the majority, this will be the first time you might have faced a shareholder dispute within your business. If this is the case, you will no doubt have many questions and concerns as to what to expect from the process. Please do get in touch if you would like some more information or would like to discuss your own specific circumstance. An initial thirty-minute consultation is free, and I’d be very happy to advise you as to the best steps to take.

Working with Andrew Marsden

Andrew Marsden

When the trust has gone and you’re at odds with your business partners, fellow directors or shareholders it can feel like there is no way forward – it can feel very unsettling.

For the majority, taking those first steps to dispute resolution can be the hardest part of the process. Should you or should you not upset the apple cart?

If you are to resolve matters sensibly and pragmatically and ensure the protection of your interests, it is crucial that you get experienced, specialist legal advice from the outset.

Explaining the dispute resolution process in a nutshell

I have spent almost 30 years working with clients navigating difficult shareholder and partnership disputes and I know that, all too often, those involved delay taking or turn to the wrong people for advice and live to regret it.

Dispute resolution and the legal process can be confusing. It may well be the first time you have faced something of this sort. To help I have prepared an “infographic” which seeks to explain what’s involved. You can get a copy here.

Instructing a barrister directly

You might also be surprised to know that you can engage a barrister directly instead of going through a solicitor. What does this mean for you? Well, it can streamline processes, gives you immediate access to specialist, expert advice and will often save you substantial costs!

What you can expect from Andrew Marsden

You may not be familiar with working with a barrister – it may even seem intimidating. That is why I have also prepared an outline of exactly what you can expect when working with me. You can obtain a copy here.

Establishing an effective working relationship

Every client I work with and the situation that they face is unique. But what they all want is a practical and commercial solution that works for them and protects their interests. A collaborative working relationship is essential to achieving this. It is very much a two-way process. The service I provide must work for you. To achieve this I welcome open dialogue and regular review and feedback. When you engage a barrister to resolve your shareholder or partnership dispute it’s essential that you establish a good working relationship with clear lines of communication from the outset.

Cost savings and other benefits in going directly to a barrister

How much will it cost? Here complete transparency is key. There is no excuse for unexpected fees or hidden costs. It is imperative to be clear, open and straightforward. I agree all fees in advance so that there are no surprise charges and I bill regularly so you know where you are. Indeed, if your lawyer is unclear about the costs involved this should be a “red flag”.

Unknown to many, it is very often cheaper to engage a barrister directly rather than going through a solicitor. Solicitor firms generally face large overheads and those inevitably get passed down to you; the client.

There are also other savings to consider. Going directly to a barrister can avoid significant delays. It reduces the chain of communication. Fundamentally, if you have a strong position you will know this quickly and can act accordingly. On the other hand, if your position is weak you can save yourself a great deal of time, trouble and money.

Engaging a specialist barrister from the very outset not only provides you with direct access to experienced, specialist advice but also ensures you avoid steps that might compromise the strength of your position further down the line. I will provide you with a clear “road map to resolution” on the best commercial terms possible.

Free 30-minute consultation

So how do you start the process to resolution? I offer a free 30-minute phone consultation. You will probably have a host of questions and I should be able to answer many of them for you immediately. So, if you’re facing a breakdown in your business relations, if you are embroiled in a shareholder or partnership dispute or if your fellow directors/shareholders or partners are behaving in an unfair or prejudicial way please get in touch – an initial conversation won’t cost you anything so you’ve nothing to lose!

When business relationships go sour – the dispute resolution process in a nutshell

Andrew Marsden

The day you go into business with a friend, relative or colleague always feels great. It’s exciting and it feels like you’ll conquer the world and make a mint.

Yet what started so well can often go sour and end up in bitterness and acrimony.

Maybe your business partner isn’t being completely transparent with the finances of the company. Perhaps they’re not pulling their weight in the same way that you are. Or it could be they’ve been holding meetings and making important decisions about the business without involving you.

If this sounds familiar? If so, you’re not alone.

It can be hard to confront but if these issues aren’t addressed quickly and effectively, dispute can arise which can ruin the business you have worked so hard to build. Don’t bury your head in the sand and ignore them. The longer they are left the more they will escalate, respective positions will become entrenched and resolution will be more difficult.

Resolving such disputes requires careful and tactful employment of all the tools available including negotiation, mediation and, if necessary, litigation. Section 994 of the Companies Act 2006 provides a mechanism for obtaining relief from any unfairly prejudicial conduct of the affairs of a company but entering into the process blind is never a good idea. The greater your understanding, the more confident and in control you will feel at each stage.

For many, the legal domain can be an intimidating one but it really doesn’t have to be.

Engage with a barrister that understands you and your business and can communicate with you effectively and you might just find it is easier to navigate than you first thought. Your ideal outcome might feel that bit less elusive too.

I have produced the below infographic to help explain the route taken to shareholder/director and partnership dispute resolution in a nutshell, and to give a good indication of the different stages and the kind of timeline this process can involve.

  • Pre-litigation

In many ways, perhaps the most critical stage; now is the best chance of resolving matters. Costs are at their minimum and so present less of an additional hurdle. Relations, though perhaps already poor, are unlikely to improve if proceedings have to be issued.

  • Issue of proceedings

Proceedings are begun by the issuing of a claim at court. This sets the litigation process off and running.

  • Statements of case

Next comes an exchange of written summaries of each side’s position to ensure that each side knows precisely what the other is saying.

  • Disclosure of documentary evidence

Each side is then required to provide the other with all the relevant documents that they have; not just those that might help their case. These include both written and electronic documents such as emails, text and WhatsApp messages and social media postings. This stage can be crucial. It is often the first time each side sees the full extent of all relevant documents and because of this, cases often settle soon after disclosure.

  • Exchange of witness evidence

An exchange of statements from all persons that are due to give evidence follows. Alongside the relevant documents, evidence to be given by witnesses is crucial to the outcome. This what you will be relying on to establish your case and, if it gets that far, what the judge will base his decision on. Investment in careful preparation of witness statements from an early stage is money very well spent.

  • Exchange of expert evidence

Often expert evidence is required. In shareholder/director or partnership disputes this is most usually from accountants or valuers. Often a single, suitably qualified expert will need to be agreed upon and appointed by both parties.

  • Trial

Once all the evidence has been gathered and exchanged, the case will be ready for a trial if a settlement hasn’t already been reached. It is then that a judge will decide all issues and make his order resolving the dispute.

  • Timescales

Legal proceedings can take time. More often than not this is the element that people underestimate. It can take as long as 2 years before a case will even get to trial so be prepared for the long-haul.

  • Settlement

It may be that you don’t need to go to Court at all. Remember that settlement can occur at any time during this process and in most cases disputes do not need to go to trial. Of course, it is better for all concerned if the dispute can be resolved by agreement at the earliest stage, with the minimum of cost and even, ideally, amicably.

  • First steps to resolving a dispute – engaging a barrister

You should always seek expert, specialist advice and at as early a stage as possible. It may well prove key to the outcome of your case.

It may surprise you to know that you can now go direct to a barrister for advice, rather than having to go through a solicitor, and dealing direct with a barrister can often work out cheaper than going through a solicitor’s firm with large overheads. And what’s even more surprising is that it’s possible to have an initial discussion directly with a barrister without ever spending a penny.

It’s essential that you can trust the person that is advising you. Your business is obviously important to you. Any dispute relating to it needs to be handled with care and diligence. You need to understand the process and to have complete trust and faith in the way it is going to be handled on your behalf.

If you are experiencing a fallout with a business partner or are looking for a way to resolve a shareholder dispute, please do get in touch. An initial conversation won’t cost you anything but will provide reassurance as to how to achieve the most favourable outcome for you.

To find out more feel free to call me on 07718 883094 or email me at andrew.marsden@commercialchambers.org and I will happily talk you through the next best steps to take.

Perhaps a shareholders’ agreement is a waste of money?

Andrew Marsden

Like an insurance policy, it’s something you pay for and then forget; hoping you’ll never need it. But, if a dispute should occur between you and your business partner and you need to dig out your shareholders’ agreement and you’ll want to know it’s well-written, up to date and deals with all the possible eventualities. Put simply, it needs to do its job in providing a route to resolving matters and avoiding costly legal bills and further upset.

There is a lot to think about when you’re entering into a new business with someone, be it a family member, friend or colleague. There are new suppliers to forge relationships with, contracts to handle, office premises to organise, policies to get in place …t he list goes on! Amongst all the excitement and pressure, the idea of adding any additional paperwork to the workload can be overwhelming, which means that all too often putting a sensible shareholders’ agreement in place slips down the list of priorities.

This can have severe consequences further down the line.  Disagreements, though never planned, are common, and it is essential that you have a well drafted shareholders” agreement in place that protects your interests and provides mechanisms for effective resolution of future conflicts.

How do you know if your shareholders’ agreement is up to scratch?

Having spent nearly thirty years specialising in resolving disputes between people in business together I have seen many shareholders’ agreements and it is fair to say that they are not all of the same standard. Regretfully, many agreements simply are not fit for purpose and shareholders only discover their agreement doesn’t do its job once they find themselves in the middle of a dispute.

So, what can be done about this? Well, it is imperative that your shareholders’ agreement is properly drawn up but a lawyer with specialist expertise and experience in this area. A specialist barrister can advise on the provisions needed to make it effective in practice. Your shareholders’ agreement should, at the very least, include these key elements:

  • It should protect the interests of all parties – a good shareholders’ agreement will help regulate the relationship between shareholders, identify rights of participation and govern the way in which the business is conducted and the company is run.
  • It should include rights of veto – such rights protect the position of minority shareholders ensuring that they cannot be excluded from important decisions affecting the business.
  • It should allow access to information –a shareholders’ agreement should provide for access to all accounts, records, documents and other detail that might be required in order for each shareholder to properly assess matters and make fully informed decisions.
  • It should provide mechanisms for the effective resolution of any future disputes – these might include compulsory retirement clauses, share transfer provisions, “put and call” options, valuation provisions and provisions regarding mediation/arbitration so as to avoid expensive litigation.

The truth is, without an effective agreement in place, all shareholders are left vulnerable and their position and interests in the company are at risk. For this reason, I always advise clients to ensure that an effective shareholders’ agreement is put in place from the outset when entering into a new business venture with others.  If one has not been in place from the outset, an effective shareholders’ agreement should be entered into as soon as possible.

To ensure that your shareholders’ agreement is effective and “worth the paper it’s written on”, you should consider engaging an experienced and specialist barrister to draw one up for you. Do not try and cut corners; if your shareholders’ agreement does not cover everything you need it to, you will be leaving yourself open to unnecessary risk from the serious problems that can arise should business partners fall out with one another. A comprehensive shareholders’ agreement will put your mind at rest and protect your rights and interests, allowing you all to get on with your business.

For more information and to discuss in further detail what provisions you may need to include in your own shareholders’ agreement, please do get in touch for a free initial conversation.

I think I’ve been stitched up by my ‘trusted’ fellow shareholders

Andrew Marsden

Could your fellow shareholders, directors or your business partners really be so disingenuous?

You know the feeling when something just doesn’t feel right. That feeling might arise from a bank entry you don’t understand and which can’t seemingly be explained. It might result from your questions not being answered. Or it come about as you become increasingly aware of conversations going on and decisions being made behind your back.

For any director of a company this feeling can feel like a hard pill to swallow. It can be both hurtful and demoralising to think that your working relationship isn’t as strong as it once was.

Of course, it’s not only your relationship with your fellow shareholders, directors or business partners that may suffer; your business could be impacted significantly too!

The good news is a route to resolution can generally be found even in the most strained of circumstances. The success of this resolution will largely come down to what steps you take in the wake of the fallout and who you engage to assist with it.

Dealing with a fallout

When you’ve had someone cheat on you behind your back – whether that’s in work or in a personal relationship – there are generally two ways to move forward.

The first is to get emotional and upset and try to make the wrongdoer “pay” or to try to get “even”.

The other is to think logically and practically, strip away the emotion, and, take a far more proactive approach. This will almost always offer a more favourable conclusion in the long term.

Do remember it is very easy to let emotion take over and lead your actions. It’s understandable; particularly when someone close to you has breached your trust. However, it’s important that this doesn’t cloud your judgement or impact negatively on your chances of resolving the dispute on the best terms available.

What outcome are you looking for?

This is the key question to ask yourself when you are in the midst of a conflict with a fellow shareholder. Getting “even” may be the tempting option but is it really the goal here? Take time to sit down and reflect on what outcome would be best for you in this situation.

Do you want to buy out your fellow shareholder from the business and have them cease to have any further involvement in the business? Alternatively, do you yourself want to walk away from the business in exchange for a fair value for your interest in it?

Having a clear goal as to how you want to resolve matters will help define your route to resolution and the best steps to take to achieve it.

A specialist and experienced barrister should be able advise you on your options, talk you through the various dispute resolution processes available and advise on what, realistically, is achievable.

The path to resolution

  • Having the right paperwork in place: If you already have a shareholders’ agreement in place this will likely include provisions that can be used to help reach resolution. For example, a shareholders’ agreement might contain terms that permit you to force a shareholder to sell their shares. Again, care needs to be taken in enforcing such provisions and a barrister with specialist experience in this area can help you iron this detail out. (incidentally, if you don’t have a suitable shareholders’ agreement then it is certainly worth putting one in place before any conflict or dispute arises.) Even if you have no shareholders’ agreement in place you will have articles of association or a partnership agreement the terms of which might very well assist in finding the appropriate way forward to resolution.

 

  • Access to specialist legal advice: Getting sensible specialist advice from an experienced barrister early on about your legal rights is probably the best way to ensure that disputes don’t escalate and that the path to resolution is as straightforward and pain-free as it can be.

 

  • Negotiation and mediation: It is generally preferable to resolve disputes by using negotiation strategies or through engaging in mediation where possible but you should avoid getting bogged down in interminable and costly correspondence that doesn’t achieve much but serve to entrench positions. Again, your barrister can assist with this; trying always to ensure that sensible compromises are achieved while keeping relationships as intact and as amicable as possible.

 

  • Litigation: Of course, if things can’t be resolved via mediation, litigation through the courts may have to be considered as a final resort. Rest assured that if this is the route you end up taking, the right barrister will provide support throughout the process and keep costs transparent so that you enter into proceedings well prepared and confident.

 

For the majority, this will be the first time you might have faced a shareholder or partnership dispute within your business. If this is the case, you will no doubt have many questions and concerns as to what to expect. Please do get in touch if you would like some more information or would like to discuss your own specific circumstance. An initial 30 minute consultation is free and I’d be very happy to advise you as to the best steps to take.

Why resolve your partnership dispute with a specialist and experienced barrister

Andrew Marsden

When things go wrong between the partners or directors of a business, the red mist can descend and it’s the impossible to make rational decisions that will benefit any of those involved.

Getting expert specialist legal guidance is always the first step and below I explain in more detail how this might work for you.

Explaining the dispute resolution process in a nutshell

For the majority, taking the first steps to dispute resolution can be the hardest part of the process. I have spent many years working with clients navigating difficult shareholder or partnership disputes and I know that, all too often, those involved delay taking or turn to the wrong people for advice and live to regret it.

Dispute resolution and the legal process can be confusing. It may well be the first time you have faced something of this sort. To help I have prepared an “infographic” which seeks to explain what’s involved. You can get a copy here.

Instructing a barrister directly

You might also be surprised to know that you can engage a barrister directly instead of going through a solicitor. What does this mean for you? Well, it can streamline process, gives you immediate access to specialist expert advice and will often save you substantial costs!

What you can expect from Andrew Marsden

You may not be familiar with working with a barrister – it may even seem intimidating. That is why I have also prepared an outline of exactly what you can expect when working with me. You can obtain a copy here.

Establishing an effective working relationship

Every client I work with and the situation that they face is unique. But, what they all want is a practical and commercial solution that works for them. A collaborative working relationship is essential to achieving this. It is very much a two-way process. The service I provide must work for you. To achieve this I welcome open dialogue, regular review and feedback. When you engage a barrister to resolve your shareholder or partnership dispute it’s essential that you establish a good working relationship with clear lines of communication from the outset.

Cost savings and other benefits in going directly to a barrister

How much will it cost? Here complete transparency is key. There is no excuse for unexpected fees or hidden costs. It is imperative to be clear, open and straightforward. I agree all fees in advance so that there are no surprise charges and I bill regularly so you know where you are. Indeed, if your lawyer is unclear about the costs involved this should be a “red flag”.

Unknown to many, it is very often cheaper to engage a barrister directly rather than going through a solicitor. Solicitor’s firms generally face large overheads and those inevitably get passed down to you the client.

There are also other savings to consider. Going directly to a barrister can avoid significant delays. It reduces the chain of communication. Fundamentally, if you have a strong position you will know this quickly and can act accordingly. On the other hand, if your position is weak you can save yourself a great deal of time, trouble and money.

Engaging a specialist barrister from the very outset not only provides you with direct access to specialist advice but also ensures you avoid steps that might compromise the strength of your position further down the line. I will provide you with a clear “road map to resolution” on the best commercial terms possible.

Free 30 minute consultation

So how do you start the process to resolution? I offer a free 30 minute phone consultation. You will probably have a host of questions and I should be able to answer many of them for you immediately. So, if you’re facing a breakdown in your business relations, if your embroiled in a shareholder or partnership dispute or if your fellow directors/shareholders or partners are behaving in an unfair or prejudicial way please get in touch – an initial conversation won’t cost you anything so you’ve nothing to lose!

I’m being shut out from our business!

Andrew Marsden

If you’ve ever been in the position where you’ve been pushed out of your business by your business partner, you’ll know how painful and damaging it can be.

For many it comes “out of the blue”, when you least expect it and often results in feelings of betrayal.

It may be that you have caught sight of an email which suggests your fellow director is involved in another competing business. Perhaps you’ve been excluded from important decisions affecting your business. You may have discovered minutes of a meeting to which you were not invited or which went on without your knowledge.

Trust is immediately damaged and strong emotions can quickly take over. At this point confrontation might be your natural reaction; but remember – confrontation rarely leads to resolution so it is always best to hold back and plan your response to the situation carefully, pragmatically and guided by an experienced, and specialist legal professional.

The best route to dispute resolution

The temptation is to try to avoid doing so but seeking the help of an experienced legal specialist is always best. Preferably you should do so at as early a stage as possible. It can be tempting to try and battle it out alone to try to cut down on costs. However, the chances are you will pay the price in terms of stress, worry and money later down the line.

Initially, you should consider engaging an experienced, specialist barrister under the Bar Council’s Direct Access scheme. There is often no need to engage a solicitor and the costs involved can be substantially reduced. In fact, it might surprise you to know how reasonable an experienced specialist barrister’s fees are compared to those of firms of solicitors who face much larger overheads that they need to cover.

You will also get advice and representation from the barrister you actually chose to instruct. Your case will be handled personally by that barrister. It will not be passed down to more junior assistant solicitors or paralegals.

A common assumption is that once you’ve engaged a barrister you are tied into a costly and lengthy litigious battle. This couldn’t be further from the truth. My aim is always to try to secure the best terms of settlement in the quickest and cost effective way possible. Often this can be achieved effectively through negotiation or mediation and without the need to ever go to court.

Regain control

Finding yourself being shut out from your business and losing control can feel like a scary position. It may feel like all the work and effort put into building up your business is going down the drain. Things can certainly feel out of control.

Engaging an experienced and specialist barrister is one of the best things you can do in order to regain control. Your barrister will be able to advise you not only on how to protect your interests but also expertly  and clearly to guide you through the dispute resolution process so as to achieve the best resolution.

If you are currently being shut out of your business and are in need of some specialist legal advice please don’t hesitate to give me a call. There is no obligation and I offer an initial free thirty-minute consultation in which I can advise you as to the best way forward. So, to find out more and arrange a call just get in touch.