Top Tips for Managing GP Partnership Disputes
Even in successful partnerships, disputes can arise and have a significant impact on practices. The sensitive nature of partnership disputes means that it is important to try to avoid conflict, and to manage any disputes that do arise at the outset.
Common Partnership Problems
Partnership disputes can occur for any number of reasons. Common issues that arise include finances, retirement, misconduct, performance and workload, breaches of a partner’s duty of good faith and breaches of partnership agreements.
Additional issues can also arise when a partnership is operating with no formal partnership agreement documenting the arrangement, as a partnership at will.
More often than not, a partnership dispute can have consequences wider than the partnership itself, for example in relation to property and assets held outside of the partnership, or other separate joint business interests.
How to Manage Partnership Disputes
Partnership disputes can be sensitive and there can be a lot at stake. In some cases, partners may be considering expelling or compulsorily retiring a partner. This can only be done when operating under a partnership agreement and if that agreement expressly sets out those powers. Partnerships at will have no such power and are governed by the default provisions of the Partnership Act 1890.
Partnership agreements can include a range of dispute resolution provisions. Often, a partnership agreement might not have the answer for every situation that arises, and the provisions can sometimes be interpreted in different ways - involving a third party can help to resolve any disagreements and differences in interpretation.
There are some practical steps that GP practices can take to try to avoid partnership disputes arising, and to help manage and resolve any disputes that do arise, for example:
- make sure that you have a partnership agreement in place
- keep your partnership agreement up-to-date and consider an annual 'health check' to ensure that it remains fit for purpose
- if a dispute arises, read your partnership agreement at an early stage - it will help you understand your legal position and may set out mechanisms that can be used to help resolve a dispute
- keep accurate records of partnership meetings and any decision making
- try to keep channels of communication open to avoid taking entrenched positions
- be mindful of the duty of good faith that you owe each other as partners
- seek additional assistance from third parties - LMCs are often able to provide advice (to parties on both sides of the dispute) and some can provide practical assistance by supporting partnerships to engage in facilitated discussions
- take early advice – involving solicitors in a dispute enables you to understand your legal position early on and can be helpful to avoid procedural errors in dispute resolution processes which may obstruct resolving disputes smoothly
- be aware that, if matters escalate, you may be required to participate in a disclosure exercise
If a partnership dispute does arise, there are many ways it can be resolved - through negotiation, facilitated discussions, alternative dispute resolution (for example mediation and arbitration) and court proceedings. We regularly assist with drafting and updating partnership agreements, and with resolving partnership disputes. We take a pragmatic and commercial approach when providing advice.