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Disputes Between Owners Of A Business – Part III

On Behalf of | Aug 29, 2014 | Business Disputes

As mentioned in the beginning of Part I of this series, business owner disputes can have the same animosity or more than in a marital divorce. In some circumstances, divorcing spouses, notwithstanding their feelings of betrayal or their perception that their spouse is being greedy, may rise above their emotion if minor children are involved because a resolution between them would be in the best interest of their common goal; improving their children’s lives. However in a corporate divorce there are still those feelings of betrayal and perceptions that the other owner is being greedy without the buffering of these emotions because of the need to be a good parent and while some owners act like the decisions they are making are purely business decisions, for some owners those decisions are also substantially swayed by emotion.

I have tried to conclusion and settled many business disputes between co-owners and have found that the way to resolve each case depends largely on the particular issues at hand and the parties’ personalities. Obviously the easiest way to resolve a dispute is for the business owners to get together and reach an agreement, yet if they are to do so, they should have advice of legal counsel and an accountant to make sure that both legal and tax considerations are factored into the terms of the settlement. I have also found in many other cases that an experienced business mediator can help facilitate to assist both the business owners, with their respective legal counsel and accountant, to resolve the matter on terms they reach rather than terms ordered by a judge or arbitrator. Business owners who are used to negotiating contracts may think they are more than capable to negotiate their own agreement between themselves yet they should consider whether they are too close to the situation and need both the assistance of their attorney and accountant as well as a skilled mediator. An experienced business dispute mediator can in private confidential sessions help each business owner separately understand the perceived strengths and weaknesses of their case and the cost of seeing the case through a judicial resolution. Of course a good mediation is not about taking the positons of both sides and splitting it right in the middle. Any mediator that was to attempt to do that would quickly lose credibility from both parties. A mediator has to help facilitate the parties reaching an agreement based upon the actual facts and the law of the case along with the cost, time, money, and emotion in seeing the case to conclusion in the court system.

If the parties decide to mediate, they should agree amongst themselves who they think would be best suited for the mediation. Depending on the applicable facts and law, and the personalities of the decision makers for both parties, I have found that a retired judge, an experienced commercial litigation attorney, or a business transactions attorney may the best choice as a mediator. For example if one party needs a reality check as to the likelihood that his claims or defenses will be successful in court, a retired judge experienced in this area may be the best choice. If coming up with a creative resolution is required and the “devil is in the detail” a superb business transaction attorney may be the best choice. Of course, in any of those three categories of a business dispute mediator, a critical component is them having a proven track record in superior mediation skills.

At times mediation will be unsuccessful, yet I find mediations often will still benefit my clients since they then know that litigating the case to conclusion in the court system is the best alternative as compare to the other side’s final settlement posture. It should also be kept in mind in mediation that while attorneys for the parties consider they won by getting the best deal possible for their clients, the mediator may consider his “win” by successfully mediating the dispute, irrespective of what the parties have agreed to so long as both parties have attorneys counseling them as to the impropriety of the negotiated resolution. Sometimes the best decision is not to settle yet both sides should try their best in mediation to resolve their dispute on the terms they reach rather than the terms the judge imposes upon to them in a court order.

J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].