FREQUENTLY ASKED QUESTIONS
1. What are some of the issues that can lead to disputes among owners of a small business?
Disputes among small business owners can arise over a long list of issues, including:
- Compensation of officers and employees.
- Use of proceeds from sales of assets or stock.
- Employment-related decisions, including those that may involve close friends or family members.
- Contracts that involve a close associate or family member of one of the owners.
- Locations or relocations of manufacturing or office facilities.
2. What makes disputes among owners of a business difficult to resolve?
- Emotions are often involved. Emotions can blur the facts and inhibit objectivity.
- Some cases like this take many years to resolve.
- Such cases often involve requirements to disclose significant information.
- Discovery in legal action related to business disputes often involves large amounts of information. It can be challenging to understand the issues clearly enough to identify and act on a significant statement or significant omission.
- There may be ambiguity in the applicable laws. For example, some forms of “self dealing” may not be illegal.
3. What are the rights of minority shareholders of a closely held business?
- Minority shareholders have rights to certain documentation of the affairs of the business.
- They also have a right to a proportionate share of income from the business.
- Minority shareholders’ rights are protected by case law that states that majority owners have a heightened fiduciary responsibility to minority owners.
4. What qualities are important to consider when seeking an attorney or law firm for business dispute litigation?
- Experience. You want a business litigation attorney who has worked on dozens of business dispute cases. Experience is important to anticipating the issues and knowing which strategies are most likely to be effective.
- Objectivity. Look for a litigation attorney who has worked on both sides of a classic dispute among business owners, who has familiarity with both the majority and minority owner positions.
- Attention to this type of work. Seek an attorney who is a member of a firm that can provide support and attention for a long period of time. Some attorneys take cases like this to fill in gaps in their major practice areas. Other attorneys commit significant resources to business litigation.
5. If a business owner anticipates litigation related to a dispute with other owners, what steps can he or she take to maximize the likelihood of winning that litigation?
The best action to take if litigation is anticipated is to document actions as completely and carefully as possible. This could include saving emails, memos and other correspondence and using written correspondence to confirm conversations.
6. If a business owner wants to consult with a dispute litigation attorney at Harrington, Hoppe & Mitchell, who should he or she contact?
- William H. Hawley, a business litigation attorney and chairman of HHM’s Litigation Practice Group. He can be reached by email or by calling our Warren office at 330-392-1451.
- James R. Blomstrom, a business litigation attorney who is certified in civil trial law advocacy by the National Board of Trial Advocacy. He can be reached by email or by calling our Youngstown office at 330-744-1111.
- Kevin P. Murphy, a business litigation attorney. He can be reached by email or by calling our Warren office at 330-392-1451.
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