What Happens When Partners Can’t Stand Each Other Anymore?

Rule number one of Texas business partnership law is that business partners are equal partners in all aspects of their business. That is a simple statement, and a fairly easy concept, but you would be surprised at how many people are surprised when they see the concept applied in a business breakup, when emotions and vastly differing ideas of what is “fair” are the rule, not the exception.

Any lawyer who handles business litigation between partners can tell you that there is little difference between the reactions of business partners and those of angry spouses when the relationship breaks up. One spouse, or one partner, typically will sputter about “it not being fair” and how he or she “built the business by working my tail off while she spent her time at the country club”.

Maybe so, or maybe not. But unless you and your business partner agree otherwise in a valid written contract, the law says that you share responsibilities and assets equally. It doesn’t matter if you keep separate accounts at different banks. It doesn’t matter if one partner works and one doesn’t, or if one makes more money than the other. The law is not going to penalize either for “not pulling his weight”, not working hard enough, not making enough money, or spending too much time watching football and not enough time helping with the chores, or marketing.

The emotional component of business partners breaking up often has much in common with the breakup of a marriage – and in both cases emotions cloud people’s perceptions of what is “fair” or allowable. In either case, one of the functions of a lawyer is to guide you through the process of dissolving the relationship with a clear head, and keep you focused on what can and cannot be accomplished. Lawyers almost certainly can’t get you back together. We can’t make you forget that your partner cheated you. We can, however, help you focus on the future and minimizing the damage which business and marriage breakups inevitably cause.

For example, is it better for the stronger of two partners to spend his time fighting over what’s left of the dead business, or to concentrate his time and money on a new business? The answer is that it is always better to move on as quickly as possible, and that the stronger partner is always well advised to accept a small loss now in exchange for the future gain to be had when no longer tied to or distracted by the failed relationship. Put simply: the partnership is over, and the question really isn’t “what should you have done?”, but “rather what should you do now?”

Business lawyers, like divorce lawyers, serve their clients very poorly if they do not force them to focus on the future, rather than on the past. Yes, you can go after the money your partner stole from you, and you should. But you should be pragmatic about it, too: the relationship is over and cannot be saved. The issues therefore are about money, and should be addressed with the same cold-blooded objectivity as any other business issue. Have your lawyer focus on the dispute with your partner, and you worry about your future business.

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