The Pros and Cons of Taking a California Partnership Dispute to Arbitration

Although partnership disputes are one of the more common types of business litigation matters, most business owners will operate for quite a few years before the spectre of a partnership dispute arises. After all, most entrepreneurs choose their partners based on some combination of friendship, shared vision, and complementary talents, thus few enter into the close relationship of a partnership ever thinking that the need for litigation will arise. Thus, when such a dispute does arise, and the idea of facing off in court against a partner is deeply unappealing – but you have a partnership dispute that you nevertheless cannot resolve on your own – arbitration might be the way to go. Here are a few pros and cons to think about in deciding whether to take your dispute to arbitration.

You Can Resolve Your Dispute Out of the Public Eye

In an arbitration, your attorney will present evidence, written statements, and arguments before the arbitrator, but it can all be done in a completely confidential setting. While you may be able to keep certain records sealed in a courtroom litigation, there will be at least some level of public access to potentially sensitive business information when you and partner argue before a judge.  

Arbitration Is Less Formal and May Involve More Unpredictably

Arbitration does not necessarily follow the formal rules of procedure and evidence (among other things) that are involved in a courtroom trial. An arbitrator may make rulings that would not be appropriate in court or may push for unconventional solutions that you were not expecting. Whether this is a pro or a con depends on your perspective, tolerance for uncertainty, and – of course – how matters actually play out in your favor.

You Can Reach A Resolution More Quickly

Both the California state and federal courts deal with long backlogs of cases, meaning that weeks and months can pass between hearings as the fate of your business and your partnership interest hang in the balance. With an arbitration, you will still need to prepare fully for the dispute, but arbitrators are generally much more able to resolve matters quickly by working on your timeline.

Arbitration May or May Not Be Less Expensive

Because arbitration can resolve a dispute more quickly than in court, you will not necessarily face paying attorney fees for your attorney to show up to court on multiple occasions. That said, quality arbitrators can demand substantial fees that would not apply in court. Either way, your attorney will also fully prepare for trial or arbitration, but, on the whole, arbitration does tend to be a cost-effective choice.  

Arbitration Requires Agreement Between Both Parties

Your partnership agreement may include an arbitration clause which provides guidelines for how disputes should be resolved, and which might include a requirement of arbitration. Whether such a clause exists or not, you will likely still need to agree with the other party on an arbitrator that you both feel is unbiased and qualified to handle the matter.

An experienced partnership dispute attorney can assess your options for both arbitration and litigation and help you determine your best course of action.

Work With an Experienced Los Angeles Partnership Dispute Attorney

At Wagenseller Law Firm in downtown Los Angeles, our attorneys have extensive experience in resolving all types of partnership litigation matters, including those related to fraud and alleged breaches of the duty of loyalty and duty of care. Contact Wagenseller Law Firm today to schedule a consultation to discuss your partnership dispute.