AMA VICDOC Autumn 2024 - Magazine - Page 43
RESOLVING
PRACTICE
DISPUTES
Level 9 | 360 Elizabeth Street
Melbourne Victoria 3000
Australia
—
T: +613 9498 6699
Disputes arise even in the most successful practices, and often amongst partners
or colleagues who have otherwise worked harmoniously. Topics that commonly
cause conflict include decisions about premises, the sale or acquisition of a
practice, the accounting treatment of profits and expenses, and the impact of
the retirement or under-contribution of a partner. What can your practice
do to minimise the disruption that is commonly caused by these disputes?
GIVE YOUR PRACTICE
AGREEMENTS A
‘HEALTH CHECK’
—
Ensure that your practice
agreements contain the ‘rules’ for
how important decisions will be
made and any disputes resolved.
Have your agreements evolved
with your practice? Do they
reflect the operational realities
of your business?
What are the decisions that
will require a special vote of all of
the partners? Examples include a
decision to re-name or relocate the
practice, introduce a new practice
area, or acquire or sell property.
Do your agreements set out
what must happen when a partner
decides to leave the practice or
a new partner joins, or how an
interest in the practice will be
valued?
Good agreements will reduce
the possibility of conflict escalating
and provide certainty when a quick
or unpopular decision is required.
CHAMPION GOOD
GOVERNANCE IN
YOUR PRACTICE
—
Even in a small practice, effective
systems and processes are essential.
Utilise the skills of your practice
manager to establish and champion
governance in your practice.
Set agendas for your meetings,
meet regularly, and record discussion
and outcomes in accurate minutes.
In the event of a dispute, these
records will be the most reliable
evidence of what has occurred.
Provide proper notice of
meetings and conduct meetings in
accordance with the requirements
of your practice. This will reduce
the likelihood of a decision being
attacked or ‘unwound’ because of
a process irregularity.
Many disputes arise because a
partner is ‘kept out’ of information.
Provide all partners with free and
equal access to practice accounts
and records. If you believe it is
necessary to exclude a partner
in order to protect your practice,
seek legal advice.
Keep your practice accountant
independent, so that all partners
have confidence in the accounts
when a dispute about financials
arises or a valuation is required.
ACT QUICKLY
WHEN A DISPU TE
ARISES
—
Most disputes can be resolved
without the need for court
proceedings. This is especially
so when early steps are taken to
confine and address a problem.
Your practice agreements
should prescribe a mechanism
for resolving disputes that do not
require urgent legal intervention.
Waiting too long to address
a problem inevitably makes the
problem bigger and more difficult
and costly to resolve.
Where a dispute is broad or
intractable, identify matters
that might be capable of interim
resolution while bigger issues
are dealt with. For example, it
might be possible to preserve
disputed funds in a trust account
for a period of time, while broader
negotiations occur.
A network of trusted
professional advisers who
understand your practice and
can work together to support
your business if difficulties arise
is invaluable.
—
AUTHOR JANE KUPSCH
PARTNER KENNEDYS (MELBOURNE)
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