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Boardroom disputes: Why mediation is an ideal resolution mechanism

In the first part of this series, Norman Younger looked at the causes and effects of boardroom disputes. Part two will demonstrate why mediation is an ideal mechanism to address the problem.

14th Dec 2020
Director Maximiti Limited
Columnist
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Mediation
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Mediation is the business world’s best kept secret, largely out of ignorance. Ask somebody what it is and they will likely respond with a definition that defines arbitration. The latter is where a third party imposes a binding decision; the former is a method for the parties to discover a solution themselves but it is only binding if and when they find agreement and sign a document accepting it post de facto.

No pig in a poke!

In other words there is no risk - it’s almost a no-brainer to the alternatives.

Most boardroom disputes, and I include shareholder disputes here too, boil down to a perception of unfairness or matters of ego and personality.

Typically it becomes the elephant in the room at meetings, on the shop floor, and at social events, especially in a family business or a close-knit workplace. Things that people are desperate to say or maybe to hear are neither said nor heard.

Instead of letting matters fester, mediation is akin to lancing a boil.

The controlled setting of a mediation means that things that need to be said are conveyed in a less inflammatory or insensitive manner, or maybe will be said but will be acknowledged properly instead of being summarily dismissed.

Getting to mediation before a tipping point is reached is crucial, as things can take on a momentum of their own and obtaining a reply to an invitation to meditate will be a near impossibility. This is especially germane for family businesses, where so much more than the business is at stake.

Whether or not some of the things that will be said come as a revelation to a counterparty, it is possible to clear the air or reset the relationship. It might well be that unfairness has crept in over the years and the time is now ripe to rebalance things in the best interest of the business and by extension the parties directly, or it could be that somebody’s ego is standing in the way of sound judgment and they simply need it pointed out in the right setting.

Given that over 80% of mediations are successful and are concluded within a day, is that not preferable to entrenched positions with solicitors stoking up legal arguments while their billable hours mount up to nobody’s advantage but their own?

Even if reconciliation is beyond the parties, it can still be possible to agree an amicable mechanism to split the assets, especially as accountants and other professionals can participate in a mediation.

Being able to move on and put a chapter behind you should not be underestimated.

At the very least, you won’t spend the rest of your life pondering what might have been had you gone to mediation instead of court.

Read the first installment of the series here - Boardroom disputes: Causes and effects.

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By Fabrizio8472
18th Dec 2020 06:23

Thanks for the information

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