Starting a business with new partners is (hopefully) exciting, a welcome challenge, and an opportunity to work together to build something. And many business partnerships roll along like that for years. But it isn’t always smooth-running. Over time, partners may see things differently, or each have good-faith but contradictory ideas about how to run the business or new directions to take. Or it may come time for a partner to step away, and that can be a challenge to navigate.
While – as we’ve pointed out in other posts – a good partnership agreement can help reduce the friction in these situations by providing at least a solid guide for resolving disagreements, sometimes you need outside help to get to a solution. That outside help could come from a court in the form of a lawsuit, of course, and in some cases that turns out to be the best (or only) option. But often disagreements between or among business partners are particularly amenable to mediation.
A Less Confrontational Process
You went into business together because you wanted to work together, and you believed you could work together. Mediation builds on that sense of shared purpose – even in moments when you and your partners may be at loggerheads and maybe lost sight of the vision you once shared.
You get a dispute resolved in court by trying to convince the judge or jury i) how right you are; and ii) how wrong the other side is. Unsurprisingly, this has a tendency to make the parties even more unhappy with each other; you don’t make many friends by saying they’re wrong over and over again. Sometimes that is your least bad option, particularly in cases of intentional misconduct or bad faith.
But a lot of conflict starts with good faith and honest disagreement. In those situations, a conversation between the parties – guided by a mediator – is often the best path to resolution. Because mediators don’t have a stake in the dispute and won’t be making any decisions for the parties, they can see the disagreement from a different perspective. From there, they can ask questions and make suggestions that the parties can answer and consider together. Rather than confronting and accusing each other, they find themselves problem-solving.
Preserving Key Business Relationships
Mediation relies on clear and effective communication. The mediator will encourage both parties to approach their negotiations with a willingness to listen to one another and remain open to compromise. As minor issues arise during mediation, the mediator will help the parties work through the problem and move the conversation forward. It’s often the case that disputing business partners walk away from mediation with a better understanding of one another. Even if they don’t find a way to resolve their disagreement (and in most mediations, people do), mediation helps rebuild a relationship that had been damaged.
Mediation Offers Much-Needed Flexibility
Another advantage of using mediation to resolve a business partnership dispute is the flexibility the process offers. Litigation requires strict adherence to a set of rules and procedures, and judges’ rulings are limited by the controlling law.
Mediation is more fluid. It keeps the power in the hands of the parties, who, after all, know their business best and so almost certainly know better than a judge how it should run. By listening to the parties describe their business and their disagreement, and by asking questions to draw out what is most important and valuable to each party, a mediator can help parties not only see their shared interests again but also set them on the path of solving their dispute in a way that lets them get back to pursuing it. They can get creative with that solution in ways a judge never could. A judge, for example, has to interpret and enforce a partnership agreement as it’s written, but the parties could realize their old agreement doesn’t serve their needs and change it. That power of self-determination is key to value of mediation.
Learn more about the mediation process in Minneapolis and St. Paul by calling Rubric Legal LLC today at (612) 465-0074.