Because of the complex nature of family business disputes, courts, with their narrow focus on legal issues and binary outcomes, may not be the ideal place to resolve them.
Litigation is also stressful. Costs can often exceed the sums in dispute, and the result can be years of intergenerational financial and emotional pain for the family. Succession planning, shareholders agreements, mediation and negotiation often represent far more effective solutions. Court should be a last resort.
In most cases, mediation works, even for seemingly entrenched and insoluble disputes. As a skilled, experienced facilitator, I can help family members take stock in private and reflect on what’s important to them. I can explain the negative consequences for all parties in a dispute, explore realistic options, test solutions, and discover robust and long-lasting ways forward.
Finding long-term resolutions
I have worked with just about every scenario – parent/children, husband/wife, children/children, parent/children/cousin, family/nonfamily board members and other permutations. Disputes are sometimes over genuine operational decisions, sometimes driven by the perception that another family member is benefitting unfairly.
Mediation can enable different generations or factions to work out a way forward. It allows a safe space for important things to be said, giving each side an opportunity to understand the other’s perspective.
As a skilled mediator, I create a safe space, a structured process in which options can be explored. Sometimes, it’s possible to develop a solutions that protects one generation’s financial security whilst allowing younger family members to take the business forward and build on their parents’ success.
Mediation is confidential and private. It can help families avoid being dragged through courts with sensitive personal issues being made public. Admissions, concessions, and apologies can be made, without fear that they will be brought up later in court if the mediation process fails.
Prevention is better than a cure
As a mediator, I can get involved before conflict emerges. Putting timely measures in place can head off disputes and avoid their negative consequences.
In many family businesses, clear corporate governance structures and documentation are non-existent or inadequate. These businesses are commonly structured on a 50/50 basis which can work well for years. Until a disagreement, perhaps unrelated to business, occurs. At that point, businesses can become rapidly, sometimes fatally, paralyzed.
I had a case in which three siblings disputed each other’s contributions to, and rewards from the family business. It emerged that the parents had indeed treated the children unfairly. Formally documented governance arrangements could have limited the level of resentment or at the very least protected the business against impasses and stalemates.
Loose documentation can also be disastrous when a key family member dies and it’s unclear who the new shareholders are and what their role is. That’s why , even if formal agreements exist, they need to be reviewed regularly to ensure they remain relevant.
If you want to avoid conflict, advice on governance structures and agreements relating to disputes is worth its weight in gold. Even if they don’t prevent conflict, they will provide for an orderly resolution with minimum damage.