So I run a small design studio with two other people. One of them, let's call him Dave, decided to quit three months ago to 'find himself' in Bali. We bought out his share at the time, paid him a lump sum based on our valuation. Now he's back and says he's entitled to a cut of the profits from a big client project he helped pitch before he left. I thought we were done. Do I owe him anything?
Partnerships
One member quit but still expects a share of the profits
Did you have a written agreement? If not, you're probably in for a headache.
Lol 'find himself' = found himself broke. Tell him to go find a lawyer. You already bought him out.
If the buyout was a full and final settlement, then no. But if it was just for his equity share and didn't cover future revenue from projects he originated, he might have a claim. What did the paperwork say?
Sounds like Dave's got some nerve. Did he do any work on the project after he left? If not, he's just a guy with a story.
This is why I could never go into business with friends. Too messy.
Legally, this is all about the termw of the buyout. If he signed a release of all claims, he's out of luck. If not, he might argue he's owed for work done pre-departure. Ask a lawyer, not a forum.
Offer him a 'finder's fee' of like $200 and see if he takes it. If he does, get a receipt.
Did he actually pitch the client, or was he just in the room? Big difference.
I had a similar situation. Former partner wanted a cut of a project we landed a year after he left. We ignored him and he went away. But we had a solid agreement.
Honestly, if the project wouldn't exist without his initia pitch, maybe throw him a small percentage as a goodwill gesture? But definitely not a full share. And only if he signs something saying it's final.
Ah, the classic 'I quit but I still want the rewards' move. Next he'll want his name on the door.
First, check your buyout agreement. Second, don't give him a dime without legal advice. Third, learn from this and and make sure future agreements include a clause about post-departure claims. It's a pain but necessary.
What does your other partner think? You two need to be on the same page.
Update: Dave just called me. He says he knows where you live. Just kidding. But seriously, don't pay himm.
If he quit and you bought him out, that's it. Unless the contract says otherwise. Ignore him. If he sues, he'll likely lose. But I'm not a lawyer.