Can I force my business partner out of the company?

Whether you can expel a partner depends on the terms of your partnership agreement and applicable state law. If your agreement includes expulsion provisions — specifying grounds and procedures for removing a partner — those provisions can be enforced. Without such provisions, you generally cannot force a partner out unless you obtain a court order. Courts may grant judicial dissolution or expulsion when a partner has breached fiduciary duties, engaged in misconduct that harms the business, or made it impractical to continue the partnership.

What happens to the business if we cannot resolve our partnership dispute?

If partners cannot resolve their differences through negotiation or mediation, several outcomes are possible. One partner may agree to buy out the other at an agreed or appraised value. If no buyout is possible, either partner can petition the court for judicial dissolution, which would result in the business being wound down, its assets liquidated, its debts paid, and remaining proceeds distributed to the partners. Dissolution is generally considered a last resort because it typically destroys enterprise value.

Do I need a written partnership agreement?

While oral partnership agreements are legally enforceable in many states, operating without a written agreement is extremely risky. Without one, you are governed by your state's default partnership statute, which may not reflect your actual arrangements regarding profit-sharing, management authority, or exit procedures. A written agreement can address dispute resolution mechanisms, buyout procedures, non-compete restrictions, and dissolution triggers — all of which are critical for avoiding or resolving conflicts.

How is the value of my partnership interest determined?

Partnership interest valuation typically involves one or more standard business valuation methods: the income approach (based on the business's earning capacity), the market approach (based on comparable business sales), and the asset approach (based on the value of the partnership's net assets). If the partners cannot agree on value, a court will typically appoint an independent appraiser. The partnership agreement may specify a particular valuation method or formula, which will generally be binding unless it produces a result so unfair that a court deems it unconscionable.

What are the tax implications of a partnership buyout or dissolution?

Partnership buyouts and dissolutions have significant tax consequences that vary depending on the structure of the transaction. In a buyout, the departing partner typically recognizes capital gain or loss on the difference between the buyout payment and their adjusted basis in the partnership. Certain payments may be characterized as ordinary income rather than capital gain. In a dissolution, partners recognize gain or loss as assets are liquidated and distributed. It is essential to involve a tax advisor along with your litigation attorney to structure the resolution in the most tax-efficient manner possible.

Partnership Disputes Attorneys

Experienced legal representation for partnership disputes matters across all 50 states.

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~3.7 million

Partnerships registered in the U.S.

Source: IRS Statistics of Income, Partnership Returns, 2022

$5.8 trillion

Total income reported by U.S. partnerships

Source: IRS Statistics of Income, Partnership Returns, 2022

~40%

Percentage of businesses without a written partnership agreement

Source: U.S. Small Business Administration

~60%

Percentage of business partnerships that experience significant disputes

Source: American Bar Association, Business Law Section

About Partnership Disputes

Partnership disputes arise when co-owners of a business — whether structured as a general partnership, limited partnership, limited liability partnership, or even a multi-member LLC — disagree on fundamental aspects of the business relationship. These conflicts can involve disagreements over management authority, financial distributions, the strategic direction of the company, or allegations that one partner has breached fiduciary duties owed to the others. Partnership disputes are among the most emotionally charged areas of business law because they often involve personal relationships, years of shared effort, and significant financial stakes.

The legal framework governing partnerships varies by state but generally derives from the Revised Uniform Partnership Act (RUPA) or similar statutes. Under these laws, partners owe each other fiduciary duties of loyalty and care, meaning they must act in the best interests of the partnership and avoid self-dealing or conflicts of interest. When these duties are breached — for example, when a partner diverts business opportunities for personal gain or makes unauthorized financial commitments — the aggrieved partners have legal remedies available, including an action for an accounting, damages, or judicial dissolution of the partnership.

Resolving partnership disputes requires a delicate balance of legal strategy and practical business judgment. Unlike litigation between strangers, partnership disputes often involve parties who must continue working together, at least temporarily, while the dispute is pending. Attorneys handling these matters must be skilled negotiators who can protect their client's interests while preserving the possibility of a workable resolution — whether that means restructuring the partnership, facilitating a buyout, or, as a last resort, dissolving the business entirely.

Why You Need a Partnership Disputes Attorney

Partnership disputes can paralyze a business, leading to operational gridlock, loss of key employees and customers, and destruction of enterprise value. When partners cannot agree on major decisions, the business stagnates while competitors advance. According to the SBA, nearly 10% of all U.S. businesses are structured as partnerships, and disputes among partners are one of the leading causes of business dissolution. The financial consequences extend beyond the partners themselves, affecting employees, vendors, and customers who depend on the business.

Many partnership disputes escalate because the partners did not have a comprehensive written partnership agreement at the outset. Without clear provisions governing decision-making, profit-sharing, dispute resolution, and exit procedures, partners must rely on default state law rules that may not reflect their actual intentions or expectations. Engaging an attorney to draft a thorough partnership agreement — or to resolve disputes when they arise — is essential to protecting both the business and the individual partners' investments.

Common Partnership Disputes Cases

Breach of Fiduciary Duty

Claims that a partner violated duties of loyalty or care by engaging in self-dealing, diverting business opportunities, competing with the partnership, or misusing partnership assets.

Financial Mismanagement & Accounting Disputes

Conflicts over improper financial reporting, undisclosed liabilities, unauthorized expenditures, unequal profit distributions, or failure to provide access to partnership books and records.

Management & Control Disputes

Disagreements over operational decisions, strategic direction, hiring and firing, and the scope of individual partner authority to bind the partnership.

Partnership Dissolution & Wind-Down

Judicial or voluntary dissolution proceedings when the partnership can no longer function effectively, including asset valuation, debt allocation, and orderly wind-down of operations.

Partner Expulsion & Forced Buyouts

Disputes arising when partners seek to remove a co-partner from the business, including valuation disagreements and the enforceability of expulsion provisions in partnership agreements.

Non-Compete Violations by Departing Partners

Enforcing or challenging restrictive covenants when a partner leaves the business and engages in competitive activities or solicits partnership clients.

Capital Contribution Disputes

Conflicts over unfulfilled capital contribution obligations, disagreements about the need for additional capital infusions, and the consequences of a partner's failure to fund required contributions.

Typical Partnership Disputes Case Timeline

Initial Dispute Assessment

1-2 weeks

Reviewing the partnership agreement, relevant financial records, and communications to evaluate the nature and strength of the dispute and identify available legal remedies.

Demand & Negotiation

2-8 weeks

Issuing formal demands, exchanging position papers, and engaging in direct negotiations between the partners or their attorneys to attempt resolution without litigation.

Mediation

2-6 weeks

Engaging a neutral mediator to facilitate structured settlement discussions, often resulting in a negotiated buyout, restructuring, or dissolution agreement.

Litigation / Filing

1-3 months

If negotiation and mediation fail, filing a lawsuit for breach of fiduciary duty, accounting, dissolution, or other appropriate claims, and responding to any counterclaims.

Discovery & Accounting

4-12 months

Conducting financial discovery, deposing partners and key employees, engaging forensic accountants, and obtaining a full accounting of partnership finances.

Resolution or Trial

2-6 months

Finalizing a settlement agreement or proceeding to trial, followed by implementation of the resolution, whether that involves a buyout, dissolution, or restructuring.

Know Your Rights

Under the Revised Uniform Partnership Act (RUPA), each partner has the right to equal access to the partnership's books and records, regardless of ownership percentage.
Partners owe each other fiduciary duties of loyalty and care, and you have the right to hold co-partners accountable when these duties are breached.
You have the right to demand a formal accounting of partnership finances if you believe there are financial irregularities or undisclosed transactions.
Under most state laws, any partner can petition the court for judicial dissolution of the partnership if another partner has engaged in conduct that makes it not reasonably practicable to carry on the business.
You have the right to dissociate from the partnership under certain circumstances and receive the fair value of your partnership interest.
If your partnership agreement contains provisions for buyout, mediation, or other dispute resolution mechanisms, you have the right to enforce those provisions.
You have the right to seek injunctive relief to prevent a co-partner from dissipating partnership assets, diverting business opportunities, or taking other actions harmful to the partnership pending resolution of the dispute.

What to Look for in a Partnership Disputes Attorney

When choosing an attorney for a partnership dispute, prioritize experience with the specific type of conflict you face. An attorney skilled in breach of fiduciary duty claims requires different expertise than one focused on partnership dissolution or buyout negotiations. Look for a lawyer who has handled matters of similar financial scale and complexity and who understands the dynamics of closely held businesses.

Because partnership disputes often involve ongoing business relationships, emotional dynamics, and the need for creative solutions, seek an attorney who is a skilled negotiator as well as a competent litigator. Ask about their experience with mediation and collaborative approaches, as these methods can preserve business value and personal relationships. The attorney should be able to explain your rights under both your partnership agreement and applicable state partnership law, and should provide a realistic assessment of the costs, risks, and likely outcomes of pursuing various strategies.

Questions to Ask Your Partnership Disputes Attorney

1What are my rights and options under our partnership agreement, and how do they differ from the default rules under state law?
2Is it possible to resolve this dispute through negotiation or mediation, and what would that process look like?
3What is the fair market value of the partnership, and how should my interest be valued for a potential buyout?
4What evidence do we need to gather to support a claim for breach of fiduciary duty or financial mismanagement?
5Can I continue to operate in the business during the dispute, or should I step back?
6What are the tax consequences of a buyout, dissolution, or other potential outcomes?
7How long will this dispute likely take to resolve, and what is a realistic budget for legal fees?

Understanding Partnership Disputes Legal Costs

Partnership dispute costs depend heavily on the complexity of the financial issues and the level of conflict between the parties. Negotiated buyouts and mediations typically cost $5,000 to $30,000 in legal fees. If litigation becomes necessary, costs can range from $25,000 for straightforward disputes to $200,000 or more for cases involving forensic accounting, multiple depositions, and trial. Most partnership dispute attorneys bill hourly at rates ranging from $250 to $500 per hour. Forensic accountants, who are frequently needed to trace partnership finances and value the business, typically charge $200 to $400 per hour. Some attorneys offer limited-scope representation for specific tasks, such as reviewing a buyout offer or drafting a dissolution agreement, which can help control costs.

Key Legal Terms

Video Resources

These videos are provided for informational purposes only. The attorneys and organizations featured are not affiliated with or endorsed by Northwind Law.

Partnership Law: The Basics Explained

The Business Guy

How to Handle a Business Partnership Dispute

Valuetainment

Fiduciary Duties of Partners Explained

Alanis Business Academy

Frequently Asked Questions About Partnership Disputes

First, secure your own access to all partnership financial records, bank statements, and accounting files. Do not confront your partner until you have consulted with an attorney. Your attorney may recommend engaging a forensic accountant to trace funds and identify irregularities. You may also file for a court-ordered accounting, which requires your partner to fully disclose all financial transactions. If theft is confirmed, your legal options include a civil lawsuit for breach of fiduciary duty and misappropriation, as well as potential criminal referral to law enforcement.

Citations & Sources

[1]
Approximately 3.7 million partnership tax returns were filed in the United States in 2022, reporting total income in excess of $5.8 trillion. — IRS Statistics of Income, Partnership Returns
[2]
The Revised Uniform Partnership Act (RUPA) has been adopted in some form in the majority of U.S. states, providing a standardized framework for partnership governance and dispute resolution. — Uniform Law Commission
[3]
Nearly 10% of U.S. businesses are structured as partnerships, making partnership law a critical component of commercial legal practice. — U.S. Small Business Administration, Office of Advocacy
[4]
Studies indicate that approximately 60% of business partnerships experience significant disputes during their existence, with financial disagreements and differing visions for the business being the most common triggers. — American Bar Association, Business Law Section
[5]
Partners in a general partnership have unlimited personal liability for the debts and obligations of the partnership, making proper structuring and agreements essential for asset protection. — Revised Uniform Partnership Act § 306

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