Texas Partnership Agreement Attorneys

Houston Attorneys Who Draft, Review, & Structure Texas Partnerships & Partnership Agreements

You and your partner have a plan. You trust each other. You're ready to build something.

That trust is real – but it is not a contract. And when questions come up about who controls what, who gets paid first, what happens if one of you wants out, or what to do if something goes wrong – the answer cannot be "we'll figure it out." It has to be in writing, before the business depends on it.

At Hendershot Cowart P.C., we draft, review, and structure Texas partnership agreements for business owners across industries – from first-time partners signing a general partnership agreement to multi-investor LPs and joint ventures in real estate, oil and gas, and construction. We have also spent decades on the other side of these situations, litigating what happens when agreements are missing, vague, or one-sided.

The most expensive partnership disputes are not caused by bad partners. They're caused by good partners who never put the details in writing.

Questions about forming a partnership or reviewing an existing agreement? Call (713) 783-3110 to speak with a Texas partnership attorney.

On This Page:

• Four Types of Business Partnerships in Texas
• We Draft Comprehensive Business Partnership Agreements
• Common Causes of Partnership Disputes in Texas
• Enforcing Partnership Agreements in a Partnership Dispute
• Start Your Partnership on the Right Foot

In Texas, there are four types of business partnerships:

• General Partnership
• Limited Partnership
• Limited Liability Partnership (LLP)
• Joint Venture

The first, a general partnership, is the most basic. When you enter a general partnership, you and your partners are personally liable for all debts. With taxes, you account for general partnership income in the same way as any personal income, but general partnerships do not pay franchise taxes.

Next, there is a limited partnership. Under a limited partnership, there are both limited and general partners. Like a general partnership, the general partner is liable for all debts. Limited partners are only liable for the debts associated with their investments. Both partners account for income from the business, though the limited partner is only responsible for the income generated from their share of ownership. A limited partnership does pay franchise taxes.

Beyond a limited partnership, there is a limited liability partnership, or LLP. An LLP is usually used by businesses in fields with high liability risk, and partners only have exposure to that portion of the business that they directly created. They are not held responsible for another partner's debts. Like a limited partnership, an LLP pays franchise taxes.

A joint venture is a special type of general partnership that normally only lasts long enough to execute a single transaction. Joint ventures are common in real estate and foreign market investments. Partners are fully liable for debts and report income just like a general partnership.

Choosing the right structure is not only a tax or liability question; it also affects how future disagreements are handled and how easily partners can exit or bring in new investors. For example, a dispute between joint venturers on a single real estate project will look very different from an ongoing conflict among partners in a long-standing LLP. We help clients evaluate their goals, the level of risk in their industry, and the likelihood of future ownership changes so that the chosen entity reduces the chance that a disagreement will turn into a costly partnership dispute in the first place.

Partnership agreements serve several purposes – from addressing methods of valuation and resolution should future disagreements or disruptive events arise, to outlining responsibilities and obligations and a company’s core mission. Partnership agreements are powerful tools to prevent and mitigate the risk of disputes, as well as encourage solidarity.

Key issues addressed by partnership agreements may include:

• Business formation, corporate restructuring, and mergers / acquisitions
• Role responsibilities and authority, workload balance, and company objectives
• Voting and decision-making rules, leadership structure, and admissions / withdrawals
• Business transactions, including asset and real estate acquisition
• Dispute resolution and valuation methods
• Buyouts or ownership transfer, business dissolution, and buy-sell agreements
• Non-compete agreements and non-solicitation agreements
• Confidentiality agreements and non-disclosure (NDA) agreements
• Business fraud, misappropriation, and funding disputes
• Contractual breaches, including breach of fiduciary duty
• Intellectual property protection and theft of trade secrets
• Shareholder oppression / squeeze-outs or freeze-outs

Ensuring partnership agreements effectively contain conflict, avoid disputes, and minimize disruption, lost value, and the toll of litigation is a complex task. Working with experienced attorneys can help you create clear and enforceable contracts tailored to your business needs.

Our firm has experience representing clients in many different industries and businesses, including difficult areas subject to heightened risk and regulatory scrutiny, such as health and medical businesses, oil and gas, construction, and more.

When we draft or revise a partnership agreement, we look beyond standard clauses and address how the partners actually work together day to day. That may include tailoring voting thresholds for critical decisions, aligning compensation with performance, and spelling out what happens if a partner becomes disabled, divorced, or involved in another competing venture. By thinking through these scenarios in advance, we help reduce the likelihood that a disagreement will escalate into litigation at the Harris County civil courts or other courts across Texas.

Many business owners do not realize they are heading toward a partnership dispute until communication has already broken down. Disputes often grow out of familiar patterns: one partner feels overworked or underpaid, another starts a competing opportunity on the side, or the partners disagree about reinvesting profits versus taking distributions. Without clear expectations in writing, these business disagreements can turn personal and quickly affect operations, cash flow, and employee morale.

Ownership changes are another frequent flashpoint that can bring partners to a standstill. Questions about the value of a departing partner’s interest, whether a spouse or heir should step into ownership, or how to handle a partner who is no longer contributing can lead to an impasse if the agreement is silent or unclear. In Houston and throughout Texas, we see disputes triggered by succession planning issues, sudden illness, and unexpected financial stress, all of which are easier to navigate when buy-sell and valuation mechanisms are clearly laid out in advance.

Allegations of misconduct can also raise the stakes dramatically, and this is often when a partnership disputes lawyer Houston business owners trust becomes essential. Claims such as breach of fiduciary duty, misuse of company funds, diversion of business opportunities, or misuse of confidential information can threaten not only the relationship among partners, but also regulatory standing, lender relationships, and the company’s reputation in a competitive market like the Houston business community. By identifying the root causes of a conflict early, we can help clients choose whether to pursue negotiation, mediation, or litigation in venues such as the Harris County District Courts or other appropriate forums.

Even with the most carefully crafted agreements, disputes and conflict can still arise. When they do, legal representation is critical. Our team has experience resolving a range of shareholder and partnership disputes from both sides of the aisle – enforcing existing contracts or asserting legal rights, and defending against claims and allegations.

Partnership agreements, if they exist at all, may or may not always address the particular business owner disputes which arise within a company. In addition to helping create comprehensive partnership agreements proactively to prevent such conflict, we also provide responsive representation needed to resolve or litigate disputes with custom-fit solutions.

In a dispute, we work with clients to identify their priorities, whether that means preserving the business, negotiating a buyout, or preparing for a departure while protecting valuable assets and trade secrets. We analyze the agreement, applicable Texas partnership laws, financial records, and communications among the partners to build a clear picture of what went wrong and what options are available. For clients looking for a partnership disputes attorney Houston business owners can turn to when relationships break down, our goal is to pursue a strategy that protects both immediate and long-term interests.

Not every conflict needs to be decided by a judge or jury at the Harris County Courthouse or other local venues. Many partnership agreements require mediation or arbitration, and even when they do not, a negotiated resolution can often preserve value and avoid public disclosure of sensitive business information. We advise clients on the advantages and risks of each path, help them prepare for negotiations or alternative dispute resolution, and are ready to move to litigation if the other side will not engage in a fair resolution.

Hendershot Cowart P.C. is a Houston-based law firm comprised of talented, award-winning trial lawyers who know the stakes of starting a partnership, and the costs of making mistakes. With over a century of collective experience, our firm is available to assist current and prospective business owners throughout Texas and beyond in creating the contracts they need, or litigating and resolving disputes and disagreements.

Many of our clients come to us after a dispute has already strained a long-standing relationship or threatened the stability of a profitable company. We take the time to understand the personalities, history, and financial structure involved so that any resolution is realistic and durable, whether it is reached in a conference room in downtown Houston or in a courtroom. By serving as a steady legal resource, we aim to help business owners move past conflict and refocus on growth.

Call (713) 783-3110 or contact us online to discuss your business law needs.