Tag: relationship

I feel sick – my business partner is stealing from me!

Andrew Marsden

You look at the bank online – someone in the business is syphoning off money from the business account.

You then work out that it’s one of your once-trusted business partners.

That feeling of betrayal is truly palpable.

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 not-so-bad 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 considered and constructive approach. This will almost always result in a more favourable result 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 negatively impact on your chances of resolving the dispute on the best terms available so that everyone can walk away, perhaps not amicably but at 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 or partner. 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 or partner 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.

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 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 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, the terms of which might also assist in finding the appropriate way forward.
  • Access to specialist legal advice – Getting appropriate, experienced and specialist legal advice from a barrister early on about your rights is perhaps 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. 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 will 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 circumstances. An initial thirty-minute consultation is free, and I’d be very happy to advise you as to the best steps to take.

Christmas – a time to reflect on your relationship

Andrew Marsden

Christmas gives us time to reflect. 

If your business relationship is going well, you might treat yourself to an extra mince pie. But if things are not going so well, you might find yourself asking questions like: ‘What am I doing this all for? Is it worth it? Is it time for change?”

Differences in opinion between those in business together are bound to happen. Clashes of personality occur. One person may become overly self-motivated or greedy. You may feel a degree of exclusion. There may even be dishonesty involved. Whatever the reason, rifts are inevitably going to be felt every now and again. Nine times out of ten, arguments will get resolved quickly. Both parties forget and move on. In other cases, reconciliation may not be so easy. 

Sometimes, relationships are strained to the point that they become irreparable.  If this is the situation you find yourself in don’t act impulsively or reactively. Take the time to consider the best course for you. Identify the measures that you need to take to protect the business and your interests in it. If you fail to do so you may find your dispute drags on, the business suffers and all you do is incur costs without making any real progress in finding a way forward out of the situation you find yourself in. On the other hand, with the right advice, planning and assistance in the implementation of that plan you might well find that the situation is resolved quickly, efficiently and cost-effectively.

Do: Enlist the best legal advice you can get as soon as you can. ‘Commercial divorce’ is complex and it’s important you are guided by an experienced specialist. You need a person who really knows the “in’s” and “out’s” in this area. You want advice from someone who not only fully understands the law and the litigation process but is also a master of all the other tools available to help resolve the position. All too often people delay seeking advice or turn to the wrong people and this can really backfire further down the line. The best course may well be to engage a specialist barrister from the start. You can now do this directly, going straight to a barrister and cutting out the “middleman”. This can ensure continuity throughout the process and it is surprisingly cost-effective too.

Don’t: Panic or let emotion get the better of you. If you’ve been personally impacted by a business relationship fall-out there are likely to be a lot of emotions involved. In the heat of the moment it can be difficult to determine between what feels right for you right now and what’s right for the business and for you and your interests in the longer term. Try to resist knee-jerk reactions. Approach the matter as calmly and as pragmatically as possible. 

Do: Check what provisions you have in place in any constitutional documents. They might offer a route to resolution. You are likely to have such agreements between you whether in the form of a shareholders’ agreement, articles of association or a partnership agreement. If properly prepared those documents should define responsibilities, assist in the smooth running of the business and include appropriate dispute resolution mechanisms. If not speak to your barrister and get them in place now before tensions rise and resolving issues becomes much more difficult.

Don’t: Assume you’ll need to go to court. Most disputes can be resolved without the need to issue any legal proceedings at all. Litigation really is the last resort. It can be costly and drawn out. Most “commercial divorces” can be settled out of court through negotiation; often via mediation. Even if your business relationship seems beyond repair, an experienced and specialist barrister can help to re-open those communication channels.

Do: Ask questions throughout. Most people who require legal help won’t have been involved in the process before. It’s completely understandable that you should have questions and concerns. Raise them all at any stage, and your barrister should be able to explain matters to you and bring you both clarity and confidence. Take a look at the infographic that I have prepared – see below:

which explains and simplifies the whole process: . Make sure you have complete faith in the person advising you and avoid finding yourself in a position you would rather not be in. 

Don’t: Be afraid to ask about costs. There is no reason why unexpected fees or hidden costs should arise. Choose a barrister who is transparent and upfront about costs from the outset. Engaging a barrister directly is often the most cost-effective way of obtaining a resolution and a way forward in what can feel like an intractable situation. Consider using the Bar Council’s Direct Public Access scheme to take advice directly from a specialist barrister from the outset. You might also even find it is more affordable than you anticipated it might be!

If you are in the midst of a shareholder or partnership dispute and would like some guidance on how best to resolve it, feel free to get in touch with me for a confidential no-fee initial 30-minute consultation.