Founder Dispute Solicitors

Start with the documents: articles and any shareholders agreement may contain casting votes, deadlock or buyout provisions. Where they do not, the practical routes are negotiation and mediation towards one founder buying the other out, since a fifty fifty company cannot function against itself indefinitely. As a last resort, a deadlocked quasi partnership can found an unfair prejudice petition or a petition to wind the company up on just and equitable grounds, and the credible prospect of those remedies is usually what unlocks the buyout negotiation.

What the documents say happens. Vesting schedules, good leaver and bad leaver provisions and compulsory transfer articles are enforced as written, which is why they exist. Where nothing was agreed, the departed founder generally keeps their shares, contribution or not, and the remaining founders’ options are negotiation, a buyout, or restructuring around the problem. That asymmetry is the single best argument for putting founder terms in writing on day one, and the single most common source of these disputes when nobody did.

The joint venture agreement governs: what each party committed, what counts as default, and what remedies follow, from cure periods and step in rights to termination and buy sell provisions. Where commitments have been breached, claims for breach of contract sit alongside the contractual machinery. Where the agreement is thin, the venture vehicle's constitution and general company or partnership law fill the gaps. The strategy is chosen against the commercial position: whether you want the venture performed, exited or unwound.

The law reconstructs the deal from the evidence. If a company exists, the register of members is the starting point, but equity can recognise unregistered interests through resulting and constructive trusts where money, work and a common understanding show a share was intended. If no company exists, carrying on business together with a view to profit makes you partners under the Partnership Act 1890, with equal shares by default. The messages, bank transfers and conduct at the time carry more weight than anyone's recollection now.

Only if they can establish a legal or equitable entitlement: shares actually agreed and allotted, a binding promise supported by consideration, or a trust arising from contributions and common intention. Vague expectations and unpaid favours do not create equity, but documented promises and money invested can. These claims are decided on the contemporaneous record, so the response should be evidence led from the first letter, and early advice prevents admissions that convert a weak claim into a strong one.

By the mechanism the documents provide, where one exists, including any vesting discounts or leaver provisions. Where it does not, valuation follows the same principles as any shareholder dispute: independent expert evidence on the company's earnings, assets and prospects, with the quasi partnership rule that shares are usually valued pro rata without a minority discount where the venture was built on mutual trust. We work with forensic accountants so the figure advanced on your behalf is supported by evidence rather than hope.

We quote fixed fees for every stage, agreed before any work starts, at prices around 30% cheaper than a standard law firm, from the initial review of the documents and the record through to mediation or proceedings. The review stage matters most in founder disputes, because establishing what you actually own, before positions harden, is what makes the negotiated exit or buyout possible.