What Should Go Into a Florida Business Operating Agreement?
Florida business litigation attorney L. Reed Bloodworth, the managing partner of Bloodworth Law, discusses what should go into a Florida business operating agreement? Part 3 in the series covers handling business agreements.
Part 3: Handling Business Agreements
This is Part 3 in the series: Handling Business Disagreements.
By putting alternative dispute resolution clauses into a business operating agreement, members establish how to handle disagreements when litigation arises.
Reed explains that you can put in a requirement that before any lawsuit is filed, that you have to attend a mediation, and you can set up the procedures on how that mediation is going to happen.
How do you select a mediator? Make sure you agree to the time and place, maybe even an exchange of information before the mediation, and obviously, giving information to the mediator.
You can decide whether or not the members are allowed to be represented by attorneys at this mediation.
If you spent the money to set a mediation in place, and if something goes astray, wouldn’t everyone want to have legal counsel to look out for their rights, and to allow an attorney to give their professional opinion on what the terms say in the operating agreement?
Include the Arbitration Clause
And should that mediation fail, you could also include the arbitration clause. How is the mediator going to get paid, or how the arbitrator’s going to get paid. Who’s going to pay for mediation, or who’s going to pay for the arbitration? Is it all going to be confidential?
That’s something you’d want to discuss at the beginning, which includes: what are the pros and cons of arbitration versus just being allowed to file a lawsuit?
There’s a lot that can be done at the very beginning of forming an LLC, or other business entity, that will clarify how the entity will ultimately grow, or break up. Hopefully, it’s done with fewer lawsuits and more of just going back to review what the written operating agreement established.
Hire an Attorney to Draft Your Agreement
If you’re going to do business with other people, it’s imperative to hire an attorney, draft a solid operating agreement so that you have a guideline by which everything’s going to happen.
Because otherwise, you’re looking at all of the above: mediation, arbitration, litigation — whether it’s a lawsuit, or someone takes half of everything, or someone takes over the entire business.
Be sure to watch the other parts in this series on what should go into a Florida Business Operating Agreement as explained by Orlando, Florida business litigation attorney L. Reed Bloodworth.