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What are your options during an LLC dispute?

On Behalf of | Aug 14, 2023 | Business Law |

Forming an LLC is advantageous at the outset of a new business for a variety of reasons, not the least of which is the ability for multiple entrepreneurs to launch a joint venture under a separate legal identity. When two or more leaders go into business together, though, there is always a possibility of disputes to arise.

Business disputes within an LLC have the potential to harm company operations or even lead to outright dissolution in extreme circumstances. If you are preparing to launch an LLC or are already on the brink of a dispute, it is important to know your options for reaching a favorable outcome.

Refer to your operating agreement

Upon forming an LLC, particularly one that will be under joint ownership, it is crucial to draft a comprehensive operating agreement. This document can serve to prevent disputes or dissolution by outlining the rights and responsibilities of each partner. Each partner that signs the operating agreement legally binds themselves to its terms, ensuring that many disputes regarding abuse of authority will meet a quick end.

Undergo mediation or arbitration

There are some disputes that an operating agreement cannot bring to a swift resolution by its own terms. In such an instance, it may be necessary to undergo mediation or arbitration as a way to guide your company to the best possible outcome by way of unbiased intervention. Even in this scenario, an operating agreement can facilitate the process by including mutually agreeable mediation procedures.

A serious LLC dispute can sometimes seem like a death sentence for a company. With a solid operating agreement or a sound strategy for mediation or arbitration, it can be possible to reach an amicable solution even in a worst-case scenario.