Sacramento Partnerships Attorney

California Business Lawyer

General Partnership

This type of partnership consists of two or more people who, unless declared otherwise, are each personally and equally liable for the company's liabilities.

Limited Partnership

A Limited Partnership consists of one or more general partners that controls the operations of the partnership, each of whom have full and equal liability. A Limited Partnership also has any number of limited partners, who have limited liabilities and who do not control the operations of the partnership.

Each member of a general partnership is legally responsible for the business activities of all other partners. This means that if one of the partners drains the company savings account and disappears, every other partner is liable for what was taken, along with taxes on the amount and any resulting legal bills. This liability can extend even to damages occurring while one of the partners is at work on partnership business, such as causing an auto accident while driving to a business appointment. Prior to formation of the partnership, serious consideration should be given to fraud prevention and detection.

Partnership Formation

Many of the problems business partners encounter are a direct result of a failure to properly plan the partnership operations and relationship amongst the partners. All too often the positive energy and excitement present at the beginning of the business relationship eclipses the perceived need to spend even a modicum amount of time and money methodically setting up the partnership. The prevalence of sample partnership agreements on the Internet lead people to believe that merely downloading and signing these agreements go a long way to protect their rights. Maybe it does, maybe it does not. You need to be sure.

As is too often the case, friends forego written agreements because of an unstated belief that suggesting a written agreement conveys distrust to the other partner and this might sour the relationship. It is worth acknowledging that every partnership starts with a certain degree of trust between partners. The sheer number of partnership disputes is evidence that proper planning is undervalued.

At the Law Office of David S. Barrett we will advise you on the particular aspects of the partnership agreement where much attention should be directed, where disputes are likely to occur. The particular commercial enterprise of the partnership, the personalities, concerns, and goals of the partners, and the multitude of legal options dictate that attorney advice is critical at the formation stage.

A variety of issues should absolutely be considered at the onset of the business relationship, such as:

• Addition of new partners in the future
• Restrictions on transferring ownership interests to third parties
• Control of partnership finances
• Third-party auditing and fraud prevention
• Trade secret protection
• Who do you want to be a partner, as opposed to someone who merely has a right to profit sharing
• Expected roles of each partner
• Initial cost outlays of each partner
• Salaries, draws, and distribution of profits

Partnership Disputes

Whether temporary or severe, a partnership dispute should be handled immediately. The Law Office of David S. Barrett handles disputes involving breach of partnership agreements, partner and employee embezzlement, misappropriation of trade secrets, and general partnership disputes. Whether it is one partner claiming the other is (i) not doing his ‘share’, (ii) claiming ownership of partnership assets, (iii) not allowing inspection of partnership financial material, or (iv) receiving secret profits.

Efforts should always be taken to resolve the dispute, and that it is wise to retain a professional who can offer creative approaches to resolve disputes. If resolution of the dispute is not possible, then you need an aggressive attorney to take the opposition head on.

Partnership Dissolution

Because the great majority of documented evidence is in electronic format, including evidence of financial misconduct, it is a very wise investment to purchase ‘keylogging’ software on business computers. This software records all computer activity, including unlawful downloading of information, secret communications, passwords, and Internet activity.

In situations where business partners are unable to continue in business together, they may need to dissolve their business entity. A partnership dissolution is often complex and requires the advice and assistance of an attorney. In too many cases the partners did not utilize an attorney during the formation of the partnership and that leads to messy disputes and breakups

• Voluntary Dissolution. A partnership may be dissolved at any time with the agreement of the partners. The foremost issues that need to be negotiated involve notice to clients, responsibility and ownership of on-going projects, division of business property as well as assumption of liabilities. In certain situations, non-competition issues also may exist. A written agreement covering the details of the dissolution is important. Once an agreement is finalized, the partners then easily divide their business interests and dissolve the business entity.
• Involuntary Dissolution. Where the partners are unable to agree upon the terms of their separation or when the relationship has deteriorated beyond meaningful negotiation, a partner may need to file a lawsuit seeking dissolution of the business entity. In a dissolution lawsuit, the partner asks the Court to order the payment of liabilities, order a division of assets, and order a dissolution of the business entity. An important part of a dissolution lawsuit is the right to seek an accounting from the controlling defendant. An accounting is a formalized report of all income, expenses, assets and liabilities during a period of time; it is often rather complex, requiring the assistance of an attorney and/or accountant to prepare.
• Controlling an Alleged Wrongdoer: Appointment of a Receiver. In cases where a partner suspects or has proof that the parties in control of the business have obtained an unfair and undue profit, the court will take measures prior to conclusion of the lawsuit to monitor the business. Upon a showing of necessity, the court may appoint an independent receiver to manage the business pending resolution the dissolution lawsuit; or as an alternative, the court may order the controlling party to prepare and submit periodic reports or accounts prior to conclusion of the dissolution lawsuit.

An experienced attorney can help negotiation a timely and cost-effective buy-out or dissolution of a joint venture business, or successfully handle a dissolution action. Contact the Law Office of David Barrett today to discuss your partnership issues.