Mediating commercial conflict

The Family Business

This case involves two blood relatives, a brother and sister who had inherited a family business. Difficulties between successors to a family business are common. In fact, probate mediation among survivors and family business conflict resolution are increasingly popular fields of mediation practice.

In this case, the two relatives—let's fictitiously call them Tom and Betty— had inherited a small business that had been in the family longer than the two of them had been alive. They had grown up being part of it. The business was well-known in their rather intimate community and actually functioned as a de facto social center. The business was very much in the fiber and makeup of their family structure as well as their personal identities. Their attachment to the business was important to both of them and their standing in the community.

He Said, She Said

Tom and Betty had held the business jointly for about seven years. For the last four of those seven years, they had not spoken to each other, nor had they simultaneously worked at the business. Tom ran the business and Betty complained about not receiving her share of the profits. Betty had been threatening legal action in pursuit of her share. Tom countered that she was wrong and made an offer to buy out Betty's share of the business. Betty responded that Tom's offer and terms were absurd. So they selected mediation to try to settle their differences and find a solution before going to court.

At the Table

The backdrop for these contentions, claims, and counterclaims was, as you can well imagine, very deeply rooted issues stemming from unresolved sibling rivalry. These issues had been intensified greatly by the death of Tom and Betty's parents, events that exacerbated the conflicts and exaggerated the pain and hostility the two siblings felt toward each other.

The mediation sessions sometimes were highly charged with expressed emotion—acting out and venting. Because mediation is less formal than court, participants often take advantage of the informality to talk face to face about whatever they feel is appropriate. It's up to the mediator to ensure that the dialogue is constructive and productive. This direct manner of informal give-and-take is not likely to happen in the legal system.

The mediation process often brings to light and helps resolve previously hidden issues and agendas that fuel the conflict and impede resolution. The reason the mediation is convened initially can be just the tip of the iceberg. The underlying causes of the conflict often are like the iceberg's underwater mass—the most substantial elements are hidden.

The Outcome

Tom and Betty's primary motivation for trying mediation before they turned the case over to their attorneys was economics—they thought that mediation might be less costly than litigation in terms of both time and money. As the case turned out, they were right.

In only two sessions and six contact hours together, they ironed out the terms for a buyout agreement that was acceptable to both of them. They left with signed memos of record that outlined the details of how they wanted the buyout constructed. Their attorneys then drew up the appropriate documents to effect the legal transfer of ownership.

The relationship-building accomplished during the mediation made it possible for Tom and Betty to work through the remaining issues of the buyout together, without a mediator. They accomplished the seemingly impossible in less than a month. And the transaction was handled privately, not in a court of law where everything is a matter of public record.

Perhaps most important, the two siblings communicated and worked their way through some of the basic issues that had been creating so much conflict between them. Tom and Betty left the mediation on speaking terms after not speaking to each other for almost four years. Had they used adversarial legal representation and pursued the matter in a court of law, it is unlikely that would have happened.

Tom Oswald is a commercial mediator and ADR consultant with Mediation Transformation LLC, 9225 Stover Lane, Cleveland, OH 44141, 440-838-1435,Toswald@MediationTransformation.com, www.mediationtransformation.com.