Partnerships are a much-misunderstood area of law. Partnerships are less common than they used to be, say 50 years ago, and as a result there are fewer legal practitioners out there who have significant experience in advising in relation to them.
Mann Roberts Solicitors have years of experience dealing with all aspects of partnership disputes. A particular specialism of ours is advising clients as to how to extract the value they have built up in the partnership from it.
Issues with partnerships most commonly arise when the partnership comes to an end, but the parties can not agree what it is that they are actually due from the partnership. Commonly, disputes arise when partnerships end as a result of:
- Parties not agreeing what the assets of the partnership are. For example, there may be a substantial asset such as a property which is registered at HMRL in the name of one party but the other party contends that it is an asset of the partnership and so they are entitled to a share in it.
- Parties not having kept proper current and capital accounts for the business. The result of which is often that neither party has a true understanding of what they are entitled to on the dissolution of the partnership.
- One party believing that simply because their capital account stands in credit to a certain sum, they are automatically entitled to that sum. Usually that is not the case.
- Goodwill valuations having been entered into accounts at an over/under inflated level.
- Asset values having been entered into accounts and then not having been updated for years or even decades. This is particularly relevant to property valuations where a partnership acquires a property and enters its value into the accounts at the purchase value, years pass and when the assets are determined the increase in property value has a dramatic value on capital account values.
- Assets such as goodwill being naturally acquired by one partner on dissolution which then must be accounted for back into the partnership.
- An account not being taken in good time and an outgoing partner then being able to elect to claim either a share of profits moving forward from the business they have left or interest as to their capital entitlement.