The day after the night before, it seems topical to be talking about not letting a disagreement grow into a dispute, and then separation – but, as we have seen, that’s all too easy. So, what can you do?
Disagreements are bound to happen from time to time, so rather than wait until they have happened and then try to sort things out, why not anticipate them and build in some sort of dispute resolution mechanism? If you don’t, when things morph into disputes, positions become more entrenched, making them harder – and much more expensive – to resolve.
You might think that I’m talking about countries or couples here – but I’m actually writing this with shareholder disputes in mind. There, if the disagreement becomes a dispute then (in addition to the complexity and cost) there is every chance that, because the focus of the people in dispute has been diverted, the business in question runs into difficulty and may fail. Then, even the winner of the dispute would be a loser.
If there’s a dispute, what do you do?
- Just as in romantic entanglements, business relationships start off all “sweetness and light”. It’s hard at that time to listen to the “what if it goes wrong?” questions, but you really should – because it’s easiest to get a framework for dispute resolution sorted out when nothing is wrong.
- If you can’t, or don’t want to, do it at the start, do it shortly thereafter. Your advisers really don’t want to say “I told you so” when you get in touch with the bad news some years later.
- Using the matrimonial analogy, if things do go wrong you can divorce, reconcile or soldier on. What is best for you – and the business (because, if the business suffers, you suffer)?
- And if it goes wrong, can it be fixed? Mediation of some sort can work – and do remember that companies can have directors who represent shareholders (without being shareholders themselves). That is one way of taking some of the tension out of things.
So, if you don’t remember anything else from this short note, please do have a think about putting dispute resolution measures in place before they are needed.
If you want to discuss these matters further, please contact John Clarke.