What Should an Investor Ask About Unresolved Disputes With Former Clients or Partners?

An unresolved dispute calls for a fact-based review of what is contested, what may happen next, and how the disagreement affects the manager's business. Treat each side's account as a claim until supported by evidence. Get a timeline, supporting records, and a clear description of open issues.

Map the Dispute and Its Status

Ask who is involved, what relationship they had, when the disagreement began, and what each side says is at issue. Establish whether the matter is an informal complaint, demand letter, mediation, arbitration, court case, or another process. Ask what response has been made, what resolution each side seeks, and whether deadlines, restrictions, or interim orders apply.

Request a written chronology and documents the manager can share, such as relevant correspondence, pleadings, notices, or orders. Ask whether a confidentiality term limits disclosure. If so, ask whether a redacted document or a counsel-to-counsel explanation is possible. Separate facts supported by records from claims reported by either party.

Test the Manager's Account

Ask the manager to address the specific disputed points and describe the relationship. Compare dates and claims with the documents provided. If a case or regulatory matter is public, check the docket or agency record and read available filings. A filing may contain allegations that have not been tested, so record the procedural status and avoid describing claims as findings.

Where appropriate, speak with people who directly observed the business relationship. Ask what they personally saw, whether commitments were met, and whether the dispute affected work. Do not ask a reference to disclose confidential material or speculate about motives. Compare the reference's account with records and the manager's response.

Measure the Operational and Financial Effect

Find out whether the dispute could interrupt a key customer, lender, vendor, or business partner relationship. Ask whether funds are set aside, payments are being withheld, assets are subject to a claim, or management time is materially diverted. Request any available schedule of claimed amounts and potential obligations, then ask the finance team or accountant how those items appear in the records. For a fund, clarify whether the fund itself is a party or whether the issue concerns the manager or an affiliate.

Ask what contingency plan keeps operations moving if the dispute continues. If a key relationship may end, identify who will handle the work and what transition steps are underway. A dispute can be material before a court or arbitrator reaches an outcome if it threatens a core operation or creates a plausible unfunded obligation.

Evaluate Candor Without Deciding the Case

Note whether the manager disclosed the matter voluntarily, answered direct questions, and provided records within reasonable confidentiality limits. A dispute may have a reasonable explanation, while changing timelines, unexplained omissions, or refusal to identify the parties and status raise concerns. These points do not prove misconduct; they identify facts that need resolution.

Write down established facts, competing accounts, and remaining questions. Ask the manager to correct any factual misunderstanding in writing. Discuss legal strategy, privilege, and specific documents with your attorney. See how to investigate prior lawsuits and regulatory actions and how to conduct references beyond selected contacts.

Checklist

• Get the parties, relationship, claims, timeline, and procedural status in writing.
• Request available correspondence, filings, orders, and a schedule of potential obligations.
• Confirm whether the fund, manager, affiliate, or individual is directly involved.
• Check whether the dispute threatens operations, assets, financing, or a key relationship.
• Compare the manager's account with records and direct observations from references.
• Document established facts separately from unresolved allegations and consult counsel on legal questions.

Go deeper: How should investors handle gaps or inconsistencies in a manager's disclosures?; What questions should investors ask former employees of a fund manager?.

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Sources: Family Office Club investor due diligence framework, The Family Office Book. Informational only, not financial, legal or tax advice.