Mediation Tips: The Nasty Business Dispute

Invoke the Narrative

The below scenario is about two lawyers who practice together, but the same difficulties might be found in any small business, long-standing relationship between two or a small group of partners in any kind of field. 

Assume the following facts: Two law school roommates are best friends. They study together, drink together, play sports together, double-date together, and after graduation, decide to start their own firm. Over the years things go swimmingly, they diversify, the firm expands with success. Within their respective families, they are the godparents for each other’s children, go on vacations together, drop by on Christmas, every year take vacations together to the Caribbean and Europe. Every Fall, the husbands go on a week-long backpacking trip to the Sierras. 

Then the local economy goes a bit South. Business clients fall off, and competition with other firms necessitates a reduction in billing rates. Insurance companies hire billing review firms that get paid with a percentage of billings saved (read: cut). As revenue drops off, the partners start to eye each other suspiciously, as each (without telling the other) makes the decision to bail.

Each partner starts to think the worst of the other. Late one Saturday night, one of the partners swings by the office driving a rented U-Haul, and sees the lights on. Inside, the other partner is packing up computers and client files. An argument and fistfight ensue. 

Sigh. I wish I could say the above is a hypothetical. It’s a composite sketch of several scenarios I am personally aware of. 

It would be easy to list the “benefits” of mediation in resolving the divorce-cum-business dispute of these two partners, cost, control, etc. etc. What is important to see is the extent to which what might on one level be a straightforward business dispute between partners (which presumably would be determined based on the written partnership agreement, assuming there is one), is complicated and perhaps made impossible by the emotional investment. Where just a few years ago these people were baptizing each other’s kids, now they’re breaking into the office to steal office equipment, justifying that with the belief that the other guy is going to maybe get there first. 

It is a platitude that business mediations can be saved sometimes by reminding the parties about the history of the relationship they have enjoyed over the years. As though human behavior and emotional life are so neatly packaged. But ah-ha, that relationship is exactly what makes this situation so painful, so difficult, like a marital divorce. The dynamics between the two partners as they try to work through the dissolution of the firm might be complex; these may be attorneys who normally pride themselves on their technical competence, financial acumen, and good judgment. They may be secretly mortified by the catastrophic deconstruction of their firm, and feel guilty about the declining relations between the families. 

A mediator would want to get the whole story, learn from the parties the history of the “business” relationship, and to the extent they are willing, hear in a patient and non-judgment fashion, the narrative from the beginning. Perhaps then, the discussion can move to the nuts and bolts of taking apart the business, and dividing up (without outright theft) the equipment and the clients. 

As is common in many disputes, mediation in this case involves three constellations of issues: procedural (how is the mediation going to run, what are the rules of the session itself); and two arenas of substantive issues, objective nuts and bolts, and hidden “interests.” In all likelihood, the hidden “interests,” may touch on the hurts and sense of betrayal, will have to be addressed.  But off the bat reminding both sides of that summer evening where both families had a barbecue on the beach and sang Kumbaya, might not be immediately helpful. 

The key is to listen to the emotionalism (validate) without inflaming or stirring up the situation any more than it already is. 

Having made the crack about the barbecue on the beach, this is after all a situation that brings a strong narrative that is positive. Invoking that larger, long-standing narrative may be very helpful in getting the parties to talk. One basic issue that might be addressed is whether things are beyond saving, whether this “divorce” is inevitable at this point, or some other creative, collaborative solution might be crafted to preserve the relationship. 

But these peoples’ world is changing, and that may bring a good deal of discomfort. It may be a challenge during the mediation to maintain the feeling of hope, that a reasonable, beneficial resolution may be crafted, and they may move on. 

A challenge, certainly, but hopefully not insurmountable.