San Diego Partnership Dispute Lawyer

Protecting Your Business Interests with Trusted Legal Guidance in San Diego, CA

When a business partnership begins, it often does so with shared goals, mutual trust, and a vision for success. Unfortunately, over time, differences in opinion, financial disagreements, and changes in business strategy can lead to partnership disputes. If you are facing a disagreement with a business partner, the experienced team at The McClellan Law Firm is here to help. Our San Diego partnership dispute attorneys provide comprehensive legal counsel to protect your interests and find strategic solutions for complex business conflicts. We have more than 30 years of experience helping and representing businesses in various legal matters.

Call (619) 215-1488 or fill out our online contact form today to schedule a confidential consultation.

Understanding How Partnerships Work in Business

In California, a partnership is a legal relationship between two or more individuals or entities who agree to operate a business together and share profits and losses. There are different types of partnerships, including:

• General Partnerships (GPs) – All partners manage the business and are personally liable for its debts.
• Limited Partnerships (LPs) – One or more partners manage the business, while others act as passive investors with limited liability.
• Limited Liability Partnerships (LLPs) – Common among professionals such as lawyers and accountants, LLPs offer liability protection to all partners.

Partnerships are typically governed by a partnership agreement, a written contract outlining roles, profit-sharing structures, responsibilities, and procedures for handling disputes or dissolving the partnership. When such agreements are unclear or absent, disagreements can escalate quickly and threaten the success of the business.

Common Types of Partnership Disputes

At The McClellan Law Firm, our San Diego partnership dispute lawyers have handled a wide range of disputes involving various business structures. Some of the most common types of partnership disputes include:

• Breach of Fiduciary Duty – Partners are legally required to act in good faith, exercise loyalty, and avoid conflicts of interest. Breaches can include self-dealing, misappropriating funds, or competing against the partnership.
• Disputes Over Profit Sharing – When one partner feels they are not receiving their fair share of profits or compensation, tensions can arise.
• Management Disagreements – Disputes over the direction, strategy, or daily management of the business can create significant roadblocks.
• Violation of Partnership Agreement – When one or more partners act outside the terms of the agreement, legal intervention may be required.
• Misuse or Mismanagement of Business Funds – Financial transparency is critical in a partnership. Allegations of financial mismanagement can lead to serious legal consequences.
• Partner Exit or Dissolution Disputes – When a partner wants to leave or the business is winding down, disagreements over valuation and asset division often surface.

Common Causes of Partnership Disputes

While each partnership dispute is unique, many stem from similar root causes. These include:

• Lack of Clear Written Agreements – Without a comprehensive partnership agreement, even minor misunderstandings can turn into legal conflicts.
• Inequity in Contributions – When one partner believes they are contributing more effort, time, or capital than others, resentment can build.
• Differing Visions or Goals – As businesses grow, partners may develop differing opinions on strategy, growth, or priorities.
• Financial Stress – Economic pressure often amplifies underlying tensions between partners.
• Personal Conflicts – Long-term partnerships may suffer from personality clashes, distrust, or deteriorating relationships.

California Partnership Laws You Should Know

Partnership disputes in San Diego are governed primarily by the California Revised Uniform Partnership Act (RUPA), which outlines the rights and duties of partners unless a written partnership agreement states otherwise. Under California law:

• Partners owe fiduciary duties of loyalty and care to one another.
• Each partner typically has equal rights in managing the business unless agreed otherwise.
• Partners may be personally liable for partnership debts in general partnerships.
• A partner can demand an accounting of financial records.
• Certain actions require unanimous consent from all partners.

Understanding your rights under California law is critical. If your partnership agreement is silent on a specific issue, state law will likely control the outcome of your dispute. Our San Diego partnership dispute lawyer at The McClellan Law Firm can evaluate how California law applies to your specific situation.

Signs You May Need a Partnership Dispute Attorney

Not every disagreement requires litigation. However, you should strongly consider contacting an attorney if you notice:

• A partner refusing to provide access to financial records
• Sudden unexplained withdrawals or financial discrepancies
• Secret business dealings or conflicts of interest
• Exclusion from management decisions
• Threats of removal or forced buyout
• Deadlock that prevents the business from operating effectively

Partnership Deadlock: What Happens When Partners Cannot Agree?

In 50/50 partnerships or evenly split ownership structures, decision-making deadlocks are common. When partners fundamentally disagree on critical business decisions — such as expansion, financing, mergers, or dissolution — the business can grind to a halt.

In California, resolving deadlock may involve:

• Negotiated buyouts
• Appointment of a provisional director or receiver
• Judicial dissolution
• Enforcement of buy-sell provisions in the partnership agreement

Deadlock situations are particularly sensitive because prolonged inaction can damage profitability and reputation. Our San Diego partnership dispute attorneys work swiftly to evaluate your options and protect the stability of your business.

Breach of Fiduciary Duty in Partnership Disputes

Partners owe each other the highest level of trust and loyalty. When a partner violates that duty, legal action may be necessary. Examples of breach of fiduciary duty include:

• Diverting business opportunities for personal gain
• Commingling personal and business funds
• Concealing profits or misrepresenting financial information
• Engaging in competing ventures
• Failing to disclose conflicts of interest

If you suspect a partner has acted dishonestly or unlawfully, you may be entitled to recover financial damages. 

Valuing a Partnership Interest During a Dispute

When one partner exits or is forced out, determining the fair value of their ownership interest can be one of the most contentious aspects of a dispute. Valuation methods may include:

• Asset-based valuation
• Income-based valuation
• Market-based valuation
• Buy-sell formula specified in the partnership agreement

Improper valuation can result in significant financial loss. Our team ensures that partnership interests are evaluated fairly and in accordance with California law and contractual obligations.

Preventing Future Partnership Disputes

While disputes cannot always be avoided, proactive legal planning significantly reduces risk. At The McClellan Law Firm, we also help business owners prevent future conflicts by:

• Drafting comprehensive partnership agreements
• Including clear buy-sell provisions
• Establishing dispute resolution clauses
• Clarifying management authority and voting rights
• Creating exit strategies

Strong documentation and strategic planning can protect both the partnership and individual partners from costly legal battles down the road.

How to Resolve Partnership Disputes in California

Depending on the nature of the dispute and the goals of the partners, there are several possible resolution paths:

• Negotiation and Mediation: Often, disputes can be resolved through negotiation or mediation with the help of an experienced business attorney. This informal approach allows partners to work through their disagreements with guidance while avoiding the time and cost of litigation.
• Arbitration: If the partnership agreement includes an arbitration clause, the parties may be required to resolve disputes through binding arbitration. This process can be faster and more private than court proceedings.
• Litigation: When other methods fail, litigation may be necessary. Our San Diego partnership dispute lawyers are experienced trial attorneys who aggressively represent our clients in court to protect their rights and business interests.
• Dissolution or Buyout: In some cases, it may be in everyone’s best interest for one partner to exit the business or for the partnership to dissolve entirely. We guide clients through the legal and financial implications of dissolution or partner buyouts to ensure fair outcomes.

Partnership Dispute FAQs

Can I sue my business partner in California?

Yes. If your partner has breached the partnership agreement, violated fiduciary duties, or caused financial harm, you may file a lawsuit to seek damages or other legal remedies.

What if there is no written partnership agreement?

California law will govern the partnership under default statutory rules. This often results in equal management rights and shared profits unless proven otherwise.

How long do partnership disputes take to resolve?

The timeline depends on whether the dispute is resolved through negotiation, mediation, arbitration, or litigation. Some cases settle in months, while complex litigation may take longer.

Can I remove a partner from the business?

Removal depends on the terms of the partnership agreement and California law. In some cases, judicial intervention may be required.

What damages can I recover in a partnership dispute?

You may recover financial losses, unpaid profits, compensation for breach of fiduciary duty, and potentially attorney’s fees if allowed under your agreement.

Contact a San Diego Partnership Dispute Attorney Today

Don’t let a partnership dispute derail your business. Whether you’re facing a disagreement over profits, a breach of fiduciary duty, or need assistance with dissolving a partnership, The McClellan Law Firm is here to protect your rights and your business. Our skilled San Diego partnership dispute lawyers are ready to advocate on your behalf and guide you through every step of the process.

Contact us at (619) 215-1488 to schedule your consultation. We are here to provide the guidance you need to protect and advance your business interests efficiently.