MEDIATION AND THE FAMILY BUSINESS

The courtroom is not a place for family issues. Resolution of family business disputes in mediation helps families efficiently handle their international family business matters discretely, privately and confidentially.

Conflict is normal in business and in families. Whether disagreement over strategies or because of personal chemistry, all organisations have to learn to cope with frequent occurrences of disagreement between individuals.

In family businesses there may be occasions of conflict of opinion or personal animosity between family members who own or are employed in the business. In most cases these are either resolved amicable or allowed to be forgotten as new tasks, ideas and communications take their place at the forefront of the family members’ minds.

However, some family members working in the family business may not let an issue drop, but rather allow it to fester or recur periodically with growing strength, hindering relationships between the disputing parties and getting in the way of business progress. In extreme cases such disputes move from the informal, verbal status to legal dispute. In many cases this can lead to the breakup of the business and often simultaneously, the family unit.

Most members of a family in conflict or dispute would prefer a resolution that was agreed within the family without the need of formal legal claims or judicial decisions so long as the resolution was one with which they were satisfied. Mediation is therefore attractive to families in business who are aware of this option in times of conflict.

Mediation can play an important role in preventing a conflict from developing into a serious ongoing dispute on the one hand, and helping the parties to successfully resolve any such disputes together on the other hand.

As with all cases of mediation a successful outcome requires the willingness of all sides to genuinely agree to try to resolve the issues jointly.

WHY CHOOSE MEDIATION?

In addition to the emotional family reasons for being open to try mediation as a form of dispute resolution, several other reasons exist for choosing mediation over other methods of dispute resolution:

• Mediation may be perceived as a less expensive route to follow for dispute resolution than litigation. While a mediator’s fee may be similar to that of a corporate of family lawyer, the mediation process often takes much less time than proceeding with a case through traditional legal methods. Thus, overall charges may – though this is not always the case – prove to be significantly less via mediation;

• A formal legal dispute may take considerably longer, sometimes years, to resolve. Thus, even if the overall fees charged may be comparable, the psychological and emotional impact of a protracted legal dispute can be significantly more challenging and unhealthier to the parties involved compared to a mediation process. Of course, each case is unique but in general, mediation leads to resolution far more quickly than due process of the legal system;

• Mediation is private and confidential. Court hearings of family disputes can be a nightmare for the whole family, including all those not directly involved in the dispute. The fear of “hanging your dirty washing in public” is well enough known to have become a phrase of everyday language;

• Mediation offers different potential solutions, limited only by the flexibility of the parties and the imagination of all involved. Normally litigation has a specific objective in mind and the final resolution will be made independently by the Court, sometimes to the dissatisfaction of all parties. Mediation seeks a win-win of at least a result that is mutually agreeable to all;

• Because any positive outcome of a mediation process is achieved by the parties working together and is mutually agreeable, compliance with the resolution is normally very high. Therefore, emotional and financial costs of a renewed dispute based on the same original issue are much less likely to arise;

• A good mediator work with both the emotional or psychological baggage that comes with the dispute along with the details of the dispute itself. Because the family members, together with a neutral third party, work through sometimes deep and long-term emotional or other relationship issues, a solution that emerges from a family business dispute may therefore not only reach agreement on the actual issue at hand, but also leave the family emotionally closer than they were before the dispute arose.

PREVENTION IS BETTER THAN CURE

Mediation can be used to train family business members in processes that can help prevent small scale conflict, which is natural and can be healthy, from spiralling into destructive disputes. Alternatively, a mediator can be employed on an ad hoc or periodic basis to oversee the family business ambience particularly with regard to family members’ feelings about themselves, the business and their relationships with other family members. A trained mediator can spot potential areas of dispute and tension, skilfully bring it to the attention of the wider family team, and facilitate the resolution of the issues while such tension is still in its infancy.

In a business world of rapid change, the potential for conflicts is constantly growing. Similarly in times of economic recession or any period where the business is struggling, inherent tensions or cracks in relationships may be more likely to rise into the open. Having a mediator at the other end of the phone or email, with whom the family has past positive dispute resolution experiences can enable the investigation of new tensions and early deployment of techniques to ensure that the conflicts remain healthy and progressive. Moreover, with repeated experience of a mediator’s skilful handling of disputes the family educates itself in important ways in the important skills related to good relationship and conflict management. The mediator can teach these skills as a specific task so that everyday disputes can be handled well. Some of the key suggestions may be:

• Improving communication through family meetings whereby everyone is kept informed and able to share their perspectives and news;

• Growing understanding that every person is different and unique, and truly respecting these differences;

• Listening skills to better appreciate others’ points of view;

• Constructive but frank communication;

• Genuine appreciation of others’ skills and efforts.

CONCLUSION

The courtroom is not a place for family issues. Long drawn-out adversarial forums (outside of formal litigation) are also no places for families. Resolution of family business disputes in mediation helps families efficiently handle their internal family business matters discretely, privately and confidentially so they can keep their businesses in the family, and preserve their family wealth for generations to come. Mediation facilitation and dialogue can help families (no matter the degree of conflict) save stress, money, relationships, and opportunities of growth for all family participants. The earlier a family in conflict convenes a mediation process, the better the long-term results. Families are “priceless” and so is the utilisation of the mediation process for their use and benefit.

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Family Legacies www.family-legacies.com is a multidisciplinary family business consulting company. Our consultants are leaders in their respective fields including; Family Business Consulting, Strategic Planning, Financial Planning, Wealth & Risk Management, Corporate Finance, Business Transitions & Exit Planning - Buy, Improve, Grow & Sell Businesses, Commercial & Family Law, Executive Coaching, Leadership Development & Facilitation, providing our clients with a professional and integrated multi-disciplinary service.