Partnerships are an essential part of the contemporary business environment. Doing business in market-oriented societies requires a network of business associates and partners.
To successfully operate your business, you need partners from different branches. For example, if you specialize in clothing retail, your business cannot survive without the help of accountants, warehouse firms, and delivery companies. When your business extends over regional and national borders, you will need business strategists and hiring experts to help you coordinate the increasingly complex operations of your growing business.
However, business is not only about growth. On your journey to success, you will inevitably experience crisis and decline. One of the reasons is disputes between you and your business partners. At some point, you may start looking at business-related issues from different perspectives. Your partners can change their views on business goals, work ethics, and other aspects of your partnership. Your overall vision of success can become significantly different. What was once a converging point between you and your partners has now become a disputed issue. That is how partnership disputes arise.
Resolving partnership disputes is a precondition of any successful business. You have to resolve conflicts with your partners before continuing your business operations. Depending on the method, your business can continue thriving or become yesterday’s news.
There are two ways to deal with partnership disputes: court litigation and mediation.
Court litigation is a traditional way of dealing with partnership disputes. Although your first instinct urges you to hire an attorney and file a lawsuit against your business partner, you should think twice before taking that drastic step.
Litigation is a financially draining and time-consuming process. Sometimes it takes years to resolve a dispute, which can negatively affect your ongoing business operations. The costs of litigation can surpass the value of the disputed issue. Think of attorney fees and court expenses. The litigation consists of multiple stages (discovery, opening statements, witness examination, and closing arguments), each bringing additional costs for the parties.
The court process is public, meaning that information you share in the courtroom (often complying with a court order) becomes publicly available. Your competitors can utilize that and gain access to sensitive trade secrets.
Finally, litigation is a vindictive, adversarial procedure. Each party wants to conquer their opponent, often painting their partner in a bad light. Such an environment does not contribute to reconciliation between the partners. You may win financial compensation, but your business relationship is probably over.
Mediation is an out-of-court dispute resolution method. An alternative to the courtroom process, it has numerous advantages over traditional litigation.
First, the mediator is a third neutral person, typically a retired judge or an attorney. They possess in-depth knowledge of business partner relationships and sophisticated negotiation skills. Unlike a state-appointed judge, the parties choose the mediator voluntarily. While a judge imposes a binding decision resolving the dispute, the mediator cannot issue a decision, propose solutions or give legal advice. Likewise, the mediator is neutral. That differs them from attorneys who represent their clients. There is no conflict of interests in mediation because mediators do not represent anyone and do not have a fiduciary duty to any party.
Mediation is confidential. By signing an agreement to mediate, both parties and the mediator agree to keep all information confidential. Nothing revealed in mediation sessions can ever become part of a publicly available record. That is crucial in partnership relationships because negative publicity often damages reputation.
Unlike litigation, mediation costs are insignificant compared to an expensive attorney and court filing fees. Furthermore, the mediation process lasts several weeks or even days, making it a time and cost-effective dispute resolution method.
Most importantly, mediation preserves relationships. Sessions occur in a neutral and non-adversarial environment. Mediators create an atmosphere of trust and transparency. They facilitate negotiations between the parties, motivating them to settle. Enabling business partners to preserve their relationships yields long-term benefits for every business partnership.
The process itself has four stages. The mediators present their credentials and explain the procedure to the parties. The parties then can give an outline of their case. In private sessions (caucuses), parties talk to the mediator in separate rooms. The mediator attempts to identify their arguments and the possibility of settling. Following caucuses, the parties gather in a joint session to discuss the matter openly, bringing offers and counteroffers. The mediator facilitates the negotiations without proposing or imposing solutions.
A Florida-based mediation firm, the Mediation Group, prides itself on having expert mediators specializing in partnership dispute mediation.
At Mediation Group, we know the nuances of partnership relationships. We can help you preserve and strengthen business and personal relationships through a neutral and non-adversarial process.
Please call us today at 954-474-8700 to discuss how we can help. To book a mediation – please click on the following link.