As business lawyers at Eskander Loshak LLP, we take pride in the relationships we develop with all of our clients. We share their excitement and enthusiasm when they’re just starting out or growing their South Florida businesses. We also understand their trepidation when things go awry.
In many cases, clients turn to us when they are unable to resolve business or partnership disputes. When this happens, we must thoroughly evaluate the circumstances and devise a legal strategy that will yield the best possible outcome. Depending on the situation, we may recommend mediation as an alternative to time-consuming and costly litigation. Or we may suggest that they request an accounting. Here’s some information about the latter.
What is an accounting?
Put in its simplest terms, an accounting is a thorough review of every single transaction associated with the partnership in question. It’s usually a process that’s used when two or more business partners have a dispute regarding company finances. By law, Florida courts not only supervise this process, but are also authorized to take certain actions to resolve the dispute. Specifically, the courts can split applicable assets and liabilities, and modify partnership accounts accordingly.
Any aggrieved partner can request an accounting. However, it will only be granted if you can prove that:
- Your business arrangement can be legally classified as a partnership.
- You and your business partner had a fiduciary duty to one another as a result of said partnership.
How the accounting process works
In the context of resolving a partnership dispute, establishing that you have a right to a review is the first step in the accounting process. The next step is the review itself.
At this stage, the court will either do the review itself or select a qualified financial professional – usually a certified public accountant (CPA) to go through all of the relevant information. In addition to going through the “books,” the chosen professional (known as a “special master”) is also allowed to question the parties involved in the dispute.
By doing so, the court or special master try to determine which obligations you and the other party owe each other, if any; and who, if anyone, should be compensated.
Let’s suppose, for example, that you disagreed about the use (or alleged misuse) of certain funds. As the plaintiff or complainant (person who requested the accounting) you would have to prove that the defendant misappropriated the funds. However, the defendant would be compelled to comply with requests for all relevant information. His or her failure to do so might automatically result in the presumption that he or she misused the funds in question. You, as the plaintiff, would then get the entire amount originally entrusted to the other party.
Working with an experienced partnership dispute lawyer is essential
Because the accounting process involves intense scrutiny, it is essential to get proper legal advice and work with a knowledgeable business lawyer from the outset. At Eskander Loshak LLP, we have extensive experience handling business and partnership disputes. To see if an accounting is a viable option for the resolution of your partnership dispute, contact us online or call us at (954) 334-1122.