Disputes Between Members of an LLC

Disputes Between Member Owners of a Limited Liability Company (LLC) in San Diego

California has specific laws which govern the actions of those who own an LLC known as “members.”  There are many reasons why disputes develop between the owners of an LLC.  When disputes between members of an LLC arise it is important to seek the advice and counsel of the experienced and skilled commercial and business litigation team at Allen Barron.

Preventing Disputes Between Members of an LLC Before They Arise

The first step in managing disputes between members of an LLC is to prevent them before they ever happen.  The LLC Operating Agreement is one of the most important documents an LLC owner member may ever sign.  Unfortunately, many LLCs are begun with forms which have been downloaded from some legal website and the parties think they can simply fill in the blanks.  California law was recently overhauled to govern every act of an LLC while more clearly defining the relationship of the members and their legal and fiduciary duties to one another.  Crafting and executing a strong LLC Operating Agreement will place appropriate controls and agreements in place to prevent disputes and guide the LLC through all aspects of formation, growth, acquisition and ultimately its sale or dissolution.

Dissociation

Under California law certain events may result in a members dissociation from the LLC and change the status of the member’s ownership interest to that of a “transferee.”  The transferee may retain the economic rights and benefits of their ownership position but loses the right to participate in management decisions or voting.  It may be possible for a member in an LLC to dissociate often referred to as a “withdrawal” at any time, rightfully or wrongfully, by withdrawing as a member by express will and giving notice to the LLC.  This can lead to many disputes between members of an LLC even if the member’s actions contradict the specific provisions of the operating agreement.

Resolving Disputes Between Members of an LLC

Unlike business to business disputes there is often a lot more at stake when resolving disputes between members of an LLC such as the nature of the underlying relationships.  LLCs often involve close family relationships and friendships which extend into the social arena.  Allen Barron’s commercial and business litigation team understand the sensitivity regarding these relationship issues and works to resolve disputes quickly and efficiently.

Disputes between members in an LLC are most often resolved through negotiation between the parties and their legal representatives.  Our proven trial attorneys are skilled negotiators who work to find common ground, identify potential solutions and negotiate a resolution which reflects our client’s desired outcome for the dispute.  When negotiations cannot successfully resolve every aspect of the dispute mediation can be an effective alternative to arbitration or taking the matter before the court.

Contact LLC Member Dispute Resolution Attorneys

If you are involved in disputes between members of an LLC we invite you to review the recommendations of our clients and contact us or call 866-631-3470 for a free consultation.  Learn how Allen Barron’s attorneys can help to resolve a dispute or lawsuit in a timely manner at a reasonable cost.