The importance of legal documentation between business partners to avoid costly litigation

Arnstein & Lehr Attorney Steven N. Malitz

Steven Malitz

Arnstein & Lehr Chicago Partner Steven N. Malitz has written an article entitled, “Leverage and Documentation Create Business Freedom.” In this article, Mr. Malitz discusses his successful representation of a shareholder in two separate suits brought against him by a fellow shareholder and the facts and results of the litigation.

The case involved the disagreement between two shareholders who owned a business for many years, under a “hand-shake.”  Mr. Malitz’ client started an unrelated, non-competitive business in foreign country.  Claiming that Mr. Malitz’ client deserted the goods business, the other shareholder denied the client access to the business and eliminated his compensation. The other shareholder then sued to dissolve the goods business to start his own competing business and also filed a separate suit seeking an ownership interest in, and distributions from, the foreign business. Creating leverage by using substantive law, rules of procedure and business savvy, Mr. Malitz enabled his shareholder client to emerge from litigation free to pursue lucrative business interests.

Mr. Malitz reasons that cases like this could possibly be avoided by documenting business relationships instead of relying on oral agreements. He then goes on to provide valuable take-aways to prevent such litigation.

To read the article in full, click here.
 

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