Partnerships and family businesses often face the same challenges other businesses face but, because a different sort of personal relationship exists in a partnership or a family business, different considerations apply, especially when things go wrong.
There’s a quintessential difference. In a business dispute there may be a relationship at stake. In a partnership or a family business, it is always at stake – and the same is invariably true with private client disputes.
That means that even a straightforward commercial dispute is likely to involve an additional layer of complication. The dispute may be about business or legal issues but it can often also be about something else too, even when it isn’t immediately apparent. It might also be about who the people are, how they feel affected, and possibly even how they have experienced things previously.
While litigation can often be the best way forward, the courts aren’t good at dealing with relationships. If you want to minimise damage to the business or the individuals involved, both the problems and the people probably need sorting. Crucially, what neuroscience teaches us is that when feelings are running high in a conflict, those emotional aspects need to be dealt with before one can make serious progress with logic or legal reasoning. Otherwise it is like telling someone to calm down when they are angry. And as ineffective.
Where relationship issues or changing circumstances are part of the problem, mediation can help partners, shareholders and family members resolve their business differences early on – before the damage has been done – and salvage the business relationships – before it is too late. It also offers the ability to create tailor-made flexible solutions that suit them and their business. I am not suggesting that a mediation is just for Christmas, but with the holidays and year ends approaching, now might be a good time for clients to take stock of an existing conflict, resolve it and put it behind them for the new year.
In my next briefing, I will explore how to deal with issues as they flare up so that they don’t escalate into full-blown legal disputes.
My blogs coincide with publication of the Step Handbook: ‘Business Families and Family Businesses’, a comprehensive guide for practitioners who advise business families and their advisers. I co-wrote the section ‘Dealing with Conflict’ with Mark Lindley of Boodle Hatfield.