Without the co-founder Blumberg's knowledge, Ambrose filled out the CompDoc as a Michigan limited liability company (LLC) and listed himself as the only partner of the firm. Blumberg's employment agreement was included in the paperwork, and he instructed her to approve it despite the fact that he had left her out as a partner. By signing, she ended their partnership and became a regular employee instead of Ambrose's partner. Therefore, case between Roberta Blumberg, as Plaintiff, and Michael Ambrose et al. as defendants (Jennings, 2016), is considered a partnership even though an LLC
was created. According to Blumberg, she was to be considered a partner because before signing the documents she had indeed contributed to the development of the CampDoc program in the same way that Ambrose did. Her partnership claim is therefore authentic (Michigan Legislature, 2017)
What are the indications that there was a partnership created?
There are several pieces of evidence to declare the association between Blumberg and Ambrose a partnership. First, in 2011, Ambrose had a discussion with Blumberg about her interest in the business profit and told her that she was going to benefit from the company’s profits by receiving a share of the said revenue. Secondly, she primarily invested a lot of her time working for the CampDoc she even resigned from her paying job as a nurse to devote all her attention to the company. From 2010 to March 2012, she attended several conferences for the business and even brought in some clients; however, she was not paid nor compensated for the services. The services she offered for CampDoc in 2009 were also not paid. Even though she was compensated for most of her services under the employment agreement, she was incredibly underpaid and sometimes not paid at all. Thirdly Ambrose’s actions towards Blumberg showed an existence of a partnership; he believed that Blumberg’s services in 2011 and 2012 were worth more than she received and therefore vowed to make her a millionaire, the regular wages of an employee cannot be that much. Also, he always considered Blumberg as a co-founder of the company in addition to referring her as “its heart and face”. He never objected to this claim until Blumberg filled a case against him. Fourthly, in September in 2012, Ambrose suggested that Blumberg should own a “phantom” interest of the company which would potentially recognize her as an equity owner (Jennings, 2016).
What list of lessons could you develop for the two people who are starting a business based on what happened in this case?
Going into business with a partner can be seen as the best and an excellent way to succeed since team work is beneficial especially when starting from the ground. However, disputes are widespread in such collaboration and can result in high losses resource wise for example time and money (Laing, 2016). From the case regarding Roberta Blumberg versus Michael Ambrose, et al. there are various lessons that two people who desire to start a business in a partnership can learn especially from their failures. Firstly, generating an explicitly written agreement, the agreement should contain the responsibilities of each partner, contributions, compensation, procedures of decision marking, worst case scenarios, terms of termination, profit sharing, and the type of partnership (Clifford and Warner,2012; Gage, 2004). Blumberg and Michael, however, did not have any written agreement which landed both of them into problems. Secondly, have an attorney to represent both the parties during contract signing and drafting. Ambrose had his lawyers, but Blumberg did not, for this reason her interests were not well represented, she, therefore, signed documents without knowing what they were written on them.
Thirdly, have a good communication system and trust. The partners should be able to understand each other and communicate regularly for the partnership to be successful (Fitzpatrick, n.d). In this case, Ambrose made the decisions regarding the company alone without the consultation with his partner. He made her sign documents that could change their relationship without letting her know; this means he did not trust her and after she mentioned consulting a lawyer her services were terminated.
References
Clifford, D., & Warner, R. E. (2012). Form a partnership: The complete legal guide. Berkeley, CA: Nolo.
Fitzpatrick, J. D. (n.d.). Partnerships vs. LLCs. Retrieved September 20, 2017, from https://www.nolo.com/legal-encyclopedia/partnerships-vs-llcs.html
Gage, D. (2004). The partnership charter: How to start out right with your new business partnership (or fix the one you're in). New York: Basic Books.
Jennings, M. (2016). Business: Its legal, ethical, and global environment.
Laing, C. (2016). Progressive partnerships: The future of business.
Michigan Legislature. (n.d.). Retrieved September 20, 2017, from http://www.legislature.mi.gov/(S(g5zf2auot0xjwsu10q5kiekx))/mileg.aspx?page=GetObj ect&objectname=mcl-act-72-of-1917
