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The American Bar Association's Business Law Today publication features an article from Barry Weiner, a partner at Boston law firm Ruberto Israel & Weiner which focuses on mediation and the business divorce from the perspective of a trial lawyer and mediator.
Divorces among principals in a business frequently occur due to retirement, sickness, death, internal disputes, and financial successes or reversals. Business divorces can be very disruptive, difficult, messy, expensive, and fraught with risk, particularly for an ongoing business operation. Ideally, the parties can control the circumstances and result of a business divorce by entering into a relationship. However, in the absence of such an agreement, parties typically face unpleasant options if hostilities arise, such as suing each other or a forced dissolution and liquidation with each of these options, third parties or circumstances, rather than the business principals, will dictate the result.
To minimize these undesirable options, warring parties to a business divorce who do not have preexisting agreements dictating how the business separation shall be handled should seriously consider mediating their dispute. Confidential and informal, mediation permits the warring parties to take a step back from confrontation and explore a resolution of the dispute with a neutral entity. Three factors, however, can profoundly affect the quality of the mediation and the result: timing, mediator selection, and preparation. These factors are of particular importance in a business divorce where emotions may be running deep and wide.
While a mediation and resolution early in the dispute may result in cost savings, limit one's exposure, and bring finality, those considerations may be outweighed by others. For instance, the parties may not have sufficient information to make decisions on settlement, in which event a voluntary exchange of such information or discovery in court/arbitral proceedings may first be required. Similarly, if the parties emotionally or psychologically require some "blood letting" or reflective time to contemplate the situation and their settlement position, the timing may not be right. In those cases, while counsel might consider rating the prospect of mediation with clients and perhaps opposing counsel, the better decision may be to revisit the idea at a later date. In a business divorce with an ongoing operation at risk, however, may not be on anyone's side.
To read the full artcile please download below.
For more information
Please contact Barry Y. Weiner at Ruberto, Israel & Weiner, P.C.
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