Lawyer Monthly Magazine - February 2019 Edition

10 Monthly Round-Up FEB 2019 www. lawyer-monthly .com The number of partner- ship disputes heard in the UK High Court has dropped 20% in a year to 28 in 2017, down from 35 in 2016, says Fox & Partners, the partnership and employment law specialists. Disputes often arise when there is financial stress in a partnership, such as when a firm is dealing with tough trading con- ditions or facing a legal dispute. For example, the number of partnership disputes increased rap- idly in the immediate af- termath of the financial crisis (see graph). In a more stable eco- nomic environment, partnership disputes are less likely to occur and those that do are often related to personality conflicts, misconduct by certain partners or pres- sure to grow the busi- ness. Further, partner- ships - and professional partnerships in particular – increasingly choose to subject disputes to compulsory arbitration, which is heard in private. Despite the recent drop, any economic disruption caused by Brexit could lead to tougher trad- ing conditions for many partnerships, increasing the potential for future disputes. Fox & Partners says that from January 2019, new lower disclosure require- ments have also made it more attractive for part- ners to litigate. Previously, claimants had to pro- vide “all relevant” docu- ments but under these new rules, the courts look at individual cases and decide what should be disclosed. Lower levels of disclosure should mean lower costs. Ivor Adair, Partner at Fox & Partners, comments: “Even though disputes have fallen, we can’t be complacent as future Brexit-related economic shocks could result in more litigation, particu- larly in relation to financial services partnerships.” “Tightening trading con- ditions heighten disputes between partners about how lower profits are shared out or over any capital contributions that might be required. These conditions also lead to an increase in the num- ber of partnerships that are dissolved.” “Disputes can be very damaging for a partner- ship, eating up time and resources. It often makes Number of partnership disputes heard in the High Court drops 20% in a year - but Brexit disruption and rule changes could cause an uptick BREXIT more commercial sense for partners to look at Al- ternative Dispute Resolu- tion methods to solve a dispute. Flexibility of the process and costs can often be a major factor.” “Recent initiatives to tackle the cost of litiga- tion for claimants may also drive up the number of disputes. Previously, the huge burden that disclosure requirements represented stopped many claimants from obtaining justice through the Courts.” “As we enter a period of further uncertainty, busi- nesses may have no op- tion but to pursue cases to protect themselves against team moves of partners and employees. The Court may offer the only real solution where not all parties have signed up to arbitration.” (Source: Fox & Partners)