Lawyer Monthly - December 2021 Edition

64 WWW.LAWYER-MONTHLY.COM | DEC 2021 MEDIATIONANDARBITRATION - THEESSENTIALROLEOFALTERNATIVEDISPUTERESOLUTION INAPARTNERSHIPSPLIT Business partnerships are often the solution to a fruitful and profitable commercial relationship between partners. However, not all come to a natural end. The majority of partnership splits are attributed to a relationship breakdown between partners due to irreconcilable differences which can lead to both voluntary and involuntary departures. It is essential to resolve disputes pragmatically and without delay, as the future of the partnership will be at risk. The extremity of the dispute in question and the fragility of the relationship between partners will determine if alternative dispute resolution (ADR), such as mediation or arbitration, is suitable, or if addressing the matter through formal court proceedings is likely to bring finality to the matter. The circumstances under which a partner leaves will also dictate if the partnership can be revived or must be dissolved. The governing factor in a partnership is the partnership agreement, which is legally binding and can be used as a handbook to guide partners through major transitions. The Essential Role of Alternative Dispute Resolution in a Partnership Split A successful and revenue-rich partnership is scaffolded by a healthy and commercially orientated relationship between partners. When this support system collapses, how can alternative dispute resolution (ADR) be used to format an orderly exit? David Tattersall of Handpicked Accountants shines a spotlight on the importance of introducing ADR as a form of damage control in a partnership split. The basis of a partnership agreement is to establish the roles and responsibilities of partners, in addition to the correct way of leaving a partnership agreement to avoid unexpected disputes. Partnership disputes and alternative dispute resolution If informal efforts to resolve a long-running dispute have been exhausted, the matter may be escalated and addressed further through mediation or arbitration. Alternative dispute resolution as a means to remedy a dispute can help address the root of a disagreement and subsequently bring outstanding affairs to a close. Common reasons for a partnership split can often include personal hardships and general disagreements, or termination as a result of criminal activity or a conflict of interest. As partners are often personally related, dispute resolution must be handled with extra care. There are many forms of dispute resolution that can provide a safe space for parties to shed their concerns in a controlled environment. The flexibility provided by ADR can help re-establish the lines of communication between partners and help reach a favourable outcome when disputes appear unresolvable. In comparison to legal remedies, ADR can often present a cheaper and less time-consuming solution that is conducted in private to protect the reputation of both partners. The power of partnership agreements The exit procedure will be determined by the partnership agreement, including the distributions of company assets, liabilities, and the percentage of profits due to