Partnership disputes

Partnership disputes can arise even in the most successful businesses. Differences of opinion, breakdowns in trust or allegations of misconduct can quickly escalate  placing strain on relationships, threatening business continuity and exposing partners to significant personal and financial risk.

At Gannons, our partnership dispute solicitors advise partners and professional practices on resolving complex and sensitive partnership disputes. We understand that these disputes are rarely just legal issues — they are commercial, reputational and often personal crises requiring decisive and strategic action. Our focus is always on protecting value, preserving businesses where possible and achieving outcomes that allow our clients to move forward with certainty.

How we can assist

We provide comprehensive support at every stage of a partnership dispute, from early strategic advice through to High Court litigation and enforcement.

·       Strategic legal advice - We begin with an assessment of your legal position, partnership documentation (if any), financial arrangements and objectives. This includes identifying risks under the Partnership Act 1890, advising on duties and obligations and developing a tactical strategy aligned with your commercial goals.

·       Emergency court applications - Where urgent action is required, we act swiftly to protect your position. This includes applications for injunctions to prevent misuse of partnership assets, freezing orders to stop dissipation of funds, orders restraining competitive activity and interim relief to preserve the status quo pending resolution.

·       Negotiation and settlement - Many partnership disputes can be resolved without full litigation. We conduct robust negotiations aimed at achieving commercially sensible outcomes, including structured exits, buy-outs and revised partnership arrangements. Our approach is pragmatic but firm, ensuring your interests are fully protected.

·       Court representation - Where proceedings are unavoidable, we are able to provide representation from initial pleadings through trial and enforcement. We have a Solicitor Advocate with Higher Rights of Audience (HRA), enabling us to represent clients directly in the High Court, Court of Appeal and Supreme Court where required. This ensures continuity of representation, strategic consistency and cost efficiency. Read more here: Link: Effective litigation - Advocacy by Gannons | Gannons Solicitors

·       Alternative dispute resolution (ADR) - Courts increasingly expect parties to engage in ADR. We represent clients in mediation, arbitration and expert determination, often achieving faster and more cost-effective resolutions while minimising disruption to the business.

Common causes of partnership disputes

Partnership disputes typically arise from fundamental disagreements about business direction, financial matters or partner conduct. The most common triggers include:

·       Management and financial disputes – Disagreements over strategic decisions, day-to-day operational control, profit sharing, capital contributions,  expense allocations and access to financial information frequently lead to conflict.

·       Breach of duties – Allegations of unauthorised transactions, conflicts of interest, diversion of business opportunities, misuse of partnership assets or failure to account properly for funds are common and often serious.

·       Performance issues – Disputes may arise where a partner fails to meet obligations, engages in in misconduct, damages the firm’s reputation or breaches  partnership terms.

·       Succession planning - Poorly drafted or outdated retirement provisions often lead to disputes over notice periods, valuation of interests, buy-out provisions and ongoing restrictions.

·       Valuation disputes - Valuing a departing partner’s interest is a frequent flashpoint, particularly in professional practices. Issues may include fair value methodologies, goodwill inclusion, work in progress treatment, minority discounts and valuation timing.

·       Payment and exit terms – Disagreements may arise over how and when sums are paid, restrictive covenants, client relationship transfers and outstanding fee arrangements.

·       Involuntary departures - Attempts to expel partners often give rise to litigation, particularly where expulsion grounds are disputed or procedures have not been followed strictly. Common issues include expulsion grounds, notice periods, compensation arrangements and return of partnership property.

·       Post-departure restrictions - Disputes commonly arise over non-compete clauses, non-solicitation of clients and protection of confidential information.

No written partnership agreement?

Many partnerships operate without a formal written agreement. In such cases, the Partnership Act 1890 applies by default, often producing outcomes that do not reflect the partners’ intentions.

Under the Partnership Act 1890:

·       Profits are presumed to be shared equally, regardless of contribution

·       Any partner may dissolve the partnership at will

·       There is no automatic mechanism for expulsion

We can assist clients by:

·       Gathering evidence - emails, texts, bank records, meeting notes, client correspondence, invoices showing actual arrangements.

·       Prove actual conduct – establishing how profits were actually shared, who made decisions, capital contributions and historical partner treatment.

·       Witness evidence - from employees, clients, accountants and advisers about partnership operations.

Risk of partnership dissolution

Escalating disputes can trigger dissolution under partnership agreements or at law. Dissolution is often commercially destructive and can have serious consequences:

·       Dissolution crystallises all partnership debts immediately - creditors can demand payment.

·       Business assets may need immediate realisation, often at undervalue.

·       Clients and suppliers relationships and goodwill may be lost during dissolution process.

·       Professional indemnity insurance coverage may be affected.

·       Personal guarantees become immediately enforceable.

Possible court orders if proceedings go to trial

If partnership disputes proceed to trial, courts have extensive powers to make various orders:

·       Financial orders - monetary compensation, account of profits, restitution for misappropriated funds, interest awards, security for costs.

·       Dissolution orders - partnership dissolution, winding up with asset realisation, liquidator appointment, distribution directions, forced asset sales.

·       Injunctive relief - restraining orders, non-compete injunctions, asset preservation, confidentiality protection, mandatory performance orders.

·       Valuation orders - independent expert appointment, methodology directions, access to records, goodwill determination, work in progress assessment.

·       Structural orders - asset partition, buy-out requirements, management appointments, operational restrictions, compliance directions.

·       Enforcement powers - charging orders, freezing injunctions, asset tracing, delivery up orders, contempt proceedings.

Frequently Asked Questions

When should I seek legal advice?

As early as possible. Early advice can prevent escalation, protect your position and avoid missteps that weaken your leverage.

Can a partner force another partner out?

Only if the partnership agreement allows it and procedures are followed strictly. Otherwise, attempted expulsion may be unlawful.

Can disputes be resolved without court proceedings?

Yes. Many disputes settle through negotiation or mediation. Courts expect parties to consider ADR seriously.

How are partnership interests valued?

Valuation depends on the agreement or court principles and often involves disputes over goodwill, work in progress and methodology.

Are restrictive covenants enforceable?

They may be, but only if reasonable and protecting legitimate business interests. Courts scrutinise such clauses carefully.

Who can represent me in court?

We represent clients in the County Court and High Court, including through our Solicitor Advocate with Higher Rights of Audience.