Texas LLC Dispute Attorneys

We Resolve LLC Member Disputes & Business Entity Conflicts in Texas

When limited liability company (LLC) members find themselves in conflict, the stakes are high. Operating agreement violations, management disputes, and ownership conflicts can threaten your business investment and disrupt operations.

At Hendershot Cowart P.C., our Texas LLC dispute attorneys have over 100 years of combined experience resolving complex LLC member disputes throughout Texas. We represent LLC members, managers, and business entities in all types of conflicts – from operating agreement breaches to member buyout disputes.

On this page

• Types of LLC & Business Entity Disputes We Handle
• What Are Your Rights as an LLC Member In Texas?
• The Importance of the LLC Operating Agreement
• What Are the Legal Remedies Available to LLC Members Under Texas Law?
• How LLC Operating Agreements Can Supplement LLC Dispute Resolution Remedies
• LLC Dissolution Services
• Protecting Your LLC From Internal Disputes
• Why Choose Our Texas LLC Dispute Attorneys?
• Frequently Asked Questions 

Don't let an LLC dispute destroy your business or drain your bank account. Early legal intervention can save you thousands in litigation costs and preserve valuable business relationships. Call (713) 528-8793 or contact us online to speak with an experienced Texas LLC dispute attorney about your options.

If you’re involved in a corporate shareholder or partnership dispute, see our Partnership Dispute Attorneys page.

Types of LLC & Business Entity Disputes We Handle

LLC Member Disputes

Limited liability companies offer operational flexibility, but this same flexibility can lead to conflicts when members disagree on fundamental business decisions. Our Texas LLC dispute attorneys handle all types of member conflicts, including:

• Member voting disagreements arise when LLC members cannot reach a consensus on critical business decisions. Whether the dispute involves major operational changes, capital investments, or strategic direction, we help resolve voting deadlocks that threaten business continuity.
• Conflicts over management authority occur when LLC members disagree about who has decision-making power. These disputes often stem from unclear operating agreements or changes in member responsibilities that weren't properly documented.
• Operating agreement breaches represent violations of the foundational document governing your LLC. When members fail to fulfill their obligations under the operating agreement, we pursue appropriate legal remedies to enforce compliance and protect your interests. 
• Member deadlock situations can paralyze business operations when members cannot agree on essential decisions. We help break deadlocks through strategic negotiation, mediation, or court intervention when necessary.
• Member withdrawal or expulsion disputes involve conflicts over member departures, whether voluntary or involuntary. These disputes often develop when one member is inactive, engaged in unethical or illegal behavior, or otherwise disrupting business operations. 
• Member fiduciary duty violations occur when LLC members breach their obligations to act in the company's best interests. We pursue claims against members who engage in self-dealing, misappropriation of business opportunities, or other breaches of their fiduciary responsibilities in violation of the operating agreement or Texas law.

Business Ownership Conflicts

Ownership disputes can emerge in any business structure, but LLCs present unique challenges due to their flexible governance arrangements. Our firm addresses:

• Ownership percentage disputes involving disagreements over member equity stakes, capital contributions, or ownership allocations. These conflicts often require forensic accounting and business valuation to resolve fairly.
• Entity control disagreements happen when members dispute who has authority to manage day-to-day operations or make strategic decisions for the LLC.
• Management structure conflicts arising from unclear or disputed management arrangements, particularly in manager-managed LLCs where authority may be questioned.
• Business asset ownership issues involving disputes over whether specific assets belong to the LLC or individual members, particularly important for intellectual property and real estate.
• Entity governance violations when LLC management fails to follow proper procedures or violates state law requirements for business operations.

Operating Agreement Violations

The operating (or company) agreement serves as the constitution for your LLC, but disputes over interpretation and enforcement are common. We handle:

• Breach of LLC operating agreements involving violations of member obligations, management duties, or operational procedures specified in governing documents.
• Member obligation failures when LLC members fail to meet capital contribution requirements, operational responsibilities, or other commitments outlined in the operating agreement.
• Distribution and compensation disputes over profit sharing, member distributions, or management compensation that may violate operating agreement provisions.
• Management duty violations by LLC managers who exceed their authority or fail to fulfill their obligations to members and the business entity.
• Amendment disputes arise when LLC members disagree about proposed changes to the operating agreement. These conflicts often involve voting requirements, approval procedures, or the substance of proposed amendments.

What Are Your Rights as an LLC Member In Texas?

Generally, as a Texas LLC member, you have rights to:

• Share in profits and distributions: Your right to share in the LLC's financial success through distributions of cash and other assets are defined by the operating agreement or, if silent, by the "agreed value" of your membership contribution “as stated in the company’s records”, under Texas law. 
• Vote on company matters: Voting rights allow members to participate in company decisions, though these rights can be limited by the company agreement or when management is handled by managers instead of members. If governed by state law, each member of a limited liability company “has an equal vote at a meeting of the governing authority, members, or committee of the company.”
• Inspect books and records: LLC members have the right to examine company books, records, and financial information upon request. 
• Fiduciary duties: Texas law imposes fiduciary duties of loyalty and care that protects LLC members from misconduct by managers and other members, such as self-dealing, conflicts of interest, or mismanagement. Under a new Texas law, fiduciary duties can be modified or waived. Our LLC dispute attorneys can review your operating agreement and advise on how any such provisions may impact your right and legal options.
• Protection from expulsion: Texas law protects LLC members from arbitrary removal. Members can only be expelled if specific grounds and procedures are outlined in the operating agreement. Without clear provisions governing the removal of a member, expulsion typically requires unanimous consent of remaining members or court intervention.

The Importance of the LLC Operating Agreement

Unlike corporations with hundreds or thousands of passive investors, LLC members can negotiate their relationship based on their needs and preferences. An LLC operating agreement captures those negotiations in writing. It is a contract between members that outlines the ownership, rules, and procedures for how their business will be run. 

Without a written, signed company agreement, governance of your LLC defaults to the rules of the Texas Business Organizations Code. These generic rules may not align with your business's specific needs or the original understanding among members, and your options for resolving LLC conflicts are limited and largely depend on court discretion. 

What Are the Legal Remedies Available to LLC Members Under Texas Law?

When evaluating the rights and legal remedies available to an LLC member involved in a dispute, the first question we ask is, “Do you have an operating agreement?” The existence of a comprehensive operating agreement significantly impacts your legal options. 

Without an operating agreement, your legal options are limited to the basic remedies provided under Texas LLC law. You and your attorney can:

• Make a formal demand: You can send a written demand to enforce your right inspect the LLC’s books and records, including income tax returns, the company agreement, certificate of formation, and accounting records. An LLC that refuses to comply can be held liable for your legal fees, including attorney’s fees. 
• File a lawsuit: You can file a lawsuit for breach of fiduciary duty or breach of contract to recover financial losses caused by the violation, including lost profits, diminished membership value, or other economic harm.
• Request injunctive relief: Obtain court orders to stop ongoing violations or compel specific actions, such as forcing access to records or preventing improper distributions.
• Seek judicial dissolution: Seek court-ordered dissolution when the LLC cannot function due to member deadlock, member misconduct, or fundamental breaches that make continuation impractical.
• Ask for the appointment of a receiver: Request court-appointed management when LLC governance has broken down or members are deadlocked on critical decisions.

How LLC Operating Agreements Can Supplement LLC Dispute Resolution Remedies

A well-drafted operating agreement with dispute resolution clauses gives you practical alternatives to expensive litigation, helping resolve conflicts more efficiently while preserving business relationships.

Your attorney will review your operating agreement to look for:

• Alternative dispute resolution methods: Operating agreements often require internal negotiation, mediation, or arbitration before pursuing litigation. This approach can settle conflicts before they disrupt business relationships and damage operations.
• Buyout provisions: Agreements may provide specific buyout remedies as alternatives to dissolution or other legal actions, giving members a clear exit strategy.
• Specific duties and obligations: If a member breaches specific terms of the agreement, the court can issue an order compelling them to comply.
• Modified dissolution procedures: Operating agreements can establish different grounds for dissolution or require supermajority votes instead of court intervention.
• Tailored inspection rights: Agreements can expand or restrict record access beyond state law requirements. For example, you can exclude emails, text messages, and social media communications from inspection requests unless they formally document company action.
• No jury trials: LLCs can specify that disputes be tried before specialized business judges rather than juries. Business judges understand corporate law concepts that lay juries may struggle with, leading to more predictable outcomes.
• Forum selection: Operating agreements can ensure your business disputes get heard by Texas judges familiar with Texas business law, rather than being handled in unfamiliar jurisdictions.
• Monetary damages: The agreement can define consequences for members who violate their obligations, such as penalties for failing to make promised capital contributions.

Our LLC dispute attorneys can review your LLC’s governance documents and advise you of your specific rights and remedies. Call (713) 528-8793 or contact us online to schedule a one-hour consultation. 

LLC Dissolution Services

When LLC conflicts cannot be resolved or your business is winding down, dissolution may become necessary. Our business dissolution attorneys provide clear guidance to help you navigate this complex process.

We can help you:

• Resolve internal disputes: Mediate disagreements among members regarding asset valuation and buyout terms, or represent you in litigation when misconduct is involved.
• Wind up business affairs properly: Guide you through the legal steps to finalize business activities, including settling contracts, liquidating assets, and closing accounts.
• Handle creditor and liability issues: Negotiate with creditors to settle debts and provide required legal notices to protect members from personal liability after dissolution.
• Fulfill tax obligations: Ensure all final tax returns are filed and obtain a Certificate of Account Status from the Texas Comptroller confirming franchise taxes are paid.
• File legal documents correctly: Prepare and file necessary paperwork with the Texas Secretary of State to officially dissolve your entity.
• Distribute assets fairly: Advise on proper distribution of remaining assets to members according to your operating agreement or Texas law.
• Navigate judicial dissolution: When circumstances are severe, represent you in court to request judicial dissolution or alternative remedies like compulsory buyouts.
• Protect your ongoing interests: Address issues like intellectual property ownership and non-compete agreements that survive dissolution.

Protecting Your LLC From Internal Disputes

A comprehensive operating agreement is your best protection against internal LLC disputes. It establishes clear procedures for resolving conflicts before they become expensive lawsuits or force business dissolution, particularly when paired with strong management practices like these:

• Hold regular meetings and keep minutes: While Texas law doesn't require formal LLC meetings, holding them creates strong evidence of consistent decision-making and keeps all members informed.
• Enforce formal policies and procedures: Beyond your operating agreement, establish clear day-to-day policies for employee management, communication, and decision-making to set expectations for everyone.
• Maintain meticulous records: Keep accurate financial and operational records, including individual member capital accounts, transaction documentation, and state filings. Good record-keeping builds trust and prevents financial disputes.
• Manage fiduciary duties: LLC members and managers owe duties of loyalty and care to the company. Your attorney can help structure your operating agreement to define these duties clearly and prevent conflicts of interest disputes.
• Practice transparent financial reporting: Provide monthly or quarterly financial reports to all members, including profit and loss statements and capital account summaries. Regular communication keeps everyone informed about their financial stake.

Our business attorneys can identify gaps in your operating agreement and help you establish management practices that strengthen member relationships and prevent costly disputes.

Why Choose Our Texas LLC Dispute Attorneys?

Hendershot Cowart P.C. has represented Texas businesses in complex LLC and other business entity disputes for over 35 years. 

• We combine deep familiarity with Texas business law with practical experience to develop strategies that protect your interests and preserve your business value.
• Our attorneys have successfully resolved hundreds of LLC conflicts, including management conflicts, operating agreement violations, member removals, buyout negotiations, and LLC dissolutions.
• When you choose Hendershot Cowart P.C., you get the personal attention of experienced, award-winning attorneys who understand your business needs and objectives. 

Ready to address a simmering LLC dispute? Our team is available to discuss your options and how we can guide you toward a resolution. Call (713) 528-8793 or contact us online to speak with an attorney.

Frequently Asked Questions About LLC Disputes

Can I be forced out of my LLC?

Another member of your LLC can push you out under certain circumstances, but it must follow procedures specified in your operating agreement and comply with Texas law. Grounds for expulsion typically include breach of operating agreement, failure to meet capital obligations, or conduct harmful to the business. 

Without an operating agreement, the other LLC members or managers must negotiate for your voluntary withdrawal or ask the courts to intervene. Texas courts can order the forced buyout of a member or impose other equitable remedies.

How are LLC disputes typically resolved?

LLC disputes can be resolved through negotiation, mediation, arbitration, or litigation, depending on your operating agreement provisions and the nature of the conflict. Many operating agreements require alternative dispute resolution before court proceedings. 

In the absence of an operating agreement, Texas LLC members have limited options. You can either negotiate a resolution with your co-members or ask a court to dissolve the business – a drastic step that often destroys value for everyone involved.

What happens if my LLC doesn't have an operating agreement?

LLCs without operating agreements are governed by Texas state law, which may not reflect the members' intentions or business needs. This can make dispute resolution more difficult and unpredictable. We help LLC members understand their rights under state law and recommend implementing comprehensive operating agreements as soon as possible – before a dispute arises.

How much does LLC dispute resolution cost?

Legal costs vary significantly depending on the complexity of the dispute, the resolution method used (i.e., mediation, arbitration, or litigation), and the length of proceedings. We provide transparent fee structures and work with clients to develop cost-effective strategies for resolving their disputes. Early intervention and alternative dispute resolution can often reduce overall costs.

Can an LLC be dissolved against my will?

Involuntary dissolution is possible if an LLC dispute becomes deadlocked and the dispute is brought before the Texas courts. Texas judges can choose from several remedies when resolving LLC disputes, including dissolution. Courts may also order a buyout at fair market value, appoint someone to manage the business temporarily, or implement another solution that protects the interests of all parties. Due to the uncertain outcome, we often encourage clients to seek a voluntary settlement before getting the courts involved. 

Contact Our Texas LLC Dispute Attorneys

Don't let LLC conflicts threaten your business investment. The experienced attorneys at Hendershot Cowart P.C. are ready to help you resolve member disputes, operating agreement violations, and other business entity conflicts.

With over 100 years of combined experience in Texas business law, we provide the strategic counsel and aggressive advocacy needed to protect your interests in even the most complex LLC disputes.

Call (713) 528-8793 today for a consultation with a Texas LLC dispute attorney, or contact us online to discuss your case. We're here to help you navigate your LLC dispute and protect your business interests.