Family Business Mediation

Can I use mediation to resolve conflict in a Family Business?

Mediation is a particularly good approach for resolving Family Business Disputes because they have a number of distinctive features in addition to a legal dispute.

For example,

  • There is usually a breakdown in at least one key relationship;
  • There is often a long family history leading to the conflict;
  • There can be high emotion, and perceptions of inequality;
  • There is a tension between family loyalty and the commercial needs of the business;
  • The dispute can cause ripples throughout the family, well beyond the immediate protagonists;
  • Often there are different generations involved with different outlooks, expectations interests and needs.

What are the benefits of mediation for a Family Business Dispute?

For the reasons given above, the solution is often more about transforming relationships and not just dealing with the problem “on the table”.

There is a wide variety of differing solutions available, which are not “just about money” but can be about employment, leadership, participation in management and/or profit.

As a result, a workplace mediation model can be more successful than the traditional Civil/Commercial mediation process.

How does mediation work in a Family Business Dispute?

When participants involve their own lawyers, the lawyers will “overlay” a legal framework on top of the commercial and individual issues which have arisen. The role of a mediator is to get underneath the legal issues to discern the individual interests and needs of all relevant parties. This is often best done in some depth in advance of the mediation itself. An initial meeting with each party allows them a chance to express their views and reflect on outcomes and can help to dissipate some of the pent-up emotion.

Although it is not part of the role of a mediator to act as “judge” or “arbitrator”, he can encourage the parties to address interests beyond the immediate dispute itself, if it seems that this will lead to a longer-term resolution.

On the mediation day itself, the mediation is likely to follow more traditional lines, with a mix of joint and private meetings. However, there may be more of an emphasis towards joint meetings for so long as the parties are comfortable with this. The outcome will be recorded in a Settlement Agreement, which may or may not need to have legal effect, depending on the nature of the dispute.

What type of mediator do I need to address conflict in a Family Business?

We strongly recommend someone with relevant experience of Workplace Mediation as well as Civil and Commercial Mediation models, who also has an understanding of corporate governance issues within businesses of this nature.

See also Shareholder disputes and Boardroom deadlock