A busi­ness di­vorce lawyer

Houston Chronicle Sunday - - BUSINESS - By L.M. Sixel

When a part­ner­ship turns sour, at­tor­ney Ashish Ma­hen­dru can help fa­cil­i­tate the breakup.

friend­ship Busi­ness and part­ner­ships,shared fi­nan­cial­like mar­riages,goals, Hous­tonare built lawyeron trust, Ashish Ma­hen­dru says. He has built a le­gal spe­cialty nav­i­gat­ing dis­putes between busi­ness part­ner­ships, which can turn sour if one part­ner feels cheated when com­pany funds go missing or work du­ties aren’t di­vided equally. The Chron­i­cle sat down with Ma­hen­dru to talk about what hap­pens when the bonds are shat­tered, and his edited re­marks fol­low.

Q: You call your­self a busi­ness di­vorce lawyer. How are part­ner­ship trou­bles sim­i­lar to mar­i­tal dis­putes? A:

In a fam­ily part­ner­ship — a mar­riage — you can walk in and say I don’t want to be with that per­son any­more and ter­mi­nate the re­la­tion­ship. There is no cor­re­spond­ing right to go to a judge in a part­ner­ship dis­pute to ask the court to throw your part­ner out. You can’t just say there are ir­rec­on­cil­able dif­fer­ences. We have to cre­ate le­gal risk to eject them — re­move them, buy them out — and re­gain con­trol of the busi­ness.

Q: Do you typ­i­cally step in be­fore prob­lems erupt? A:

Some­times. But most of the time the dis­pute has erupted, and we get called to fig­ure out how to con­tain the dam­age. It could be raid­ing the till, start­ing a com­pet­ing busi­ness, poach­ing em­ploy­ees or steal­ing com­pany trade se­crets.

Q: What of­ten causes prob­lems in the first place? A:

They did not prop­erly and thought­fully ex­press the ex­pec­ta­tions of each other when they founded the busi­ness. It is im­per­a­tive not to just talk about the rosy pic­ture but what can go wrong and how the com­pany will ad­dress the prob­lems. A com­pany agree­ment is like a prenup­tial agree­ment.

Q: What of­ten goes wrong? A:

One part­ner feels that he/she is do­ing most of the work, while the other is reap­ing most of the re­wards. That im­bal­ance cre­ates dis­trust and fric­tion. In that sce­nario, the part­ner that feels cut out starts tak­ing self­help mea­sures. Like tak­ing money out of the com­pany with­out au­tho­riza­tion. With­draw­ing funds from the bank ac­count. Writ­ing them­selves a check. Pay­ing per­sonal ex­penses. The other part­ner finds out, a con­fronta­tion takes place, and the dis­pute is well un­der­way.

Q: Why do you call it self­help mea­sures? A:

Be­cause the part­ner who felt they were do­ing the work but not reap­ing the re­wards is tak­ing mat­ters into their own hands. They con­vince them­selves that their con­duct is to­tally jus­ti­fied. It’s not un­com­mon to see a com­pany of­fi­cer sued for us­ing his com­pany credit card for per­sonal ex­penses and ex­otic trips to va­ca­tion hot spots.

Be­fore they make the de­ci­sion to charge a per­sonal ex­pense to the com­pany ac­count, they go through men­tal gym­nas­tics on why it should be a com­pany ex­pense. Once that hap­pens, it be­comes a slip­pery slope.

Q: Were you a the­ater ma­jor in col­lege? Maybe English lit­er­a­ture? A:

Lib­eral arts at the Univer­sity of Texas at Austin. A heavy emphasis on lit­er­a­ture and Shake­spearean dra­mas.

Q: Does it come as a sur­prise to your clients who dis­cover their part­ner has been us­ing com­pany funds for per­sonal ex­penses?

A:

In­vari­ably, yes. The en­tire re­la­tion­ship is built on trust. I have clients in that po­si­tion for 20 plus years not ques­tion­ing their part­ner. When the dis­pute erupts, the mi­cro­scope looks back to the re­la­tion­ship with laser fo­cus. We look at ex­penses and what bucket of money should have come back to the part­ner­ship but didn’t.

Q: Is there a chance for rec­on­cil­i­a­tion? A:

In my ex­pe­ri­ence, by the time they come to me they may not know the re­la­tion­ship is shot, but when we step in and in­ves­ti­gate the ex­tent and scope of dam­age, the re­al­iza­tion the re­la­tion­ship is shot be­comes clear. You have two en­trepreneurs, founders and fa­nat­ics who are pas­sion­ate about their busi­ness ideas, driven to suc­ceed, and they don’t want their blood, sweat and tears wasted by the per­son they trust most to bring that vi­sion and pas­sion to life. If your part­ner turns out to be the per­son who stabs you in the back, the col­lat­eral dam­age for that wound is in­tense.

Q: Are there any in­dus­tries that lend them­selves more to con­flict than others? A:

The clas­sic dis­pute can re­volve around doc­tors. The in­come pot is so high and their busi­ness re­la­tion­ships are so poor, they in­vari­ably trip up. They don’t have the time and don’t have the proper checks and bal­ances in place. They are will­ing to look the other way un­til they dis­cover how much money was taken from the com­pany. But the hu­man greed fac­tor is across the

board. lm.sixel@chron.com twit­ter.com/lm­sixel

Dave Ross­man

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