Partnership Dispute Solicitors — General Partnerships, LLPs, and Dissolution

In the absence of a written partnership agreement, the Partnership Act 1890 applies as a default. The key default rules are: equal profit sharing (s.24(1)); every partner entitled to participate in management (s.24(5)); no partner entitled to a salary or interest on capital contributions (s.24(6)/(7)); and any partner can dissolve the partnership by notice (s.26 — partnership at will). These rules are often unsuitable for the actual commercial arrangement between partners. A solicitor advises on what can be established from the course of dealing and correspondence, and prepares a properly drafted partnership agreement to govern the relationship going forward.

In a partnership at will (no fixed term agreed), any partner can dissolve the partnership by giving notice to the other partners — even on the same day (s.26 PA 1890). In a fixed-term partnership, dissolution before the end of the term requires either agreement of all partners or a court order. A solicitor urgently advises on the partnership's legal status (at will or fixed-term) and, if one partner gives notice of dissolution, manages the winding-up process to ensure assets are properly realised and distributed on a fair basis — particularly goodwill, which is the most contentious asset in a professional practice dissolution.

In a general partnership, partners are jointly and severally liable for all debts and obligations incurred by the firm in the ordinary course of business (s.9 PA 1890) and for wrongful acts committed by a partner in the ordinary course of business (s.10 PA 1890). This means each partner is individually liable for the full amount of every firm debt — a creditor can pursue any partner for the whole amount, regardless of the size of each partner's contribution or profit share. By contrast, in an LLP, members' personal liability is limited — only the LLP's assets are available to creditors, unless a member has provided a personal guarantee. A solicitor advises on structuring the business to manage personal liability exposure.

If your partnership agreement contains a post-departure non-solicitation or non-dealing restriction, a solicitor applies for an urgent injunction to restrain the breach — on the same basis as any post-termination restrictive covenant. Where no partnership agreement exists, the departing partner still owes fiduciary duties during the partnership and breach of those duties (for example, diverting clients during a notice period) is actionable. After departure, in the absence of a contractual restriction, a former partner is generally free to compete — though they cannot use the firm's confidential information to do so.

On dissolution, the partnership's assets are applied first to discharge firm creditors, then to repay any loans from partners, and finally to return capital contributions before distributing any surplus profits (s.44 PA 1890). If partnership assets are insufficient to pay firm creditors, the partners are personally liable for the shortfall — jointly and severally. A creditor of the firm can pursue any partner for the full shortfall, regardless of the partner's share of the business. A solicitor manages the dissolution process and advises on each partner's rights and obligations to creditors on a winding up.