Mediation: Allowing family businesses to keep calm and carry on
Family-owned businesses come in all shapes and sizes – from small or micro-businesses run by a sole proprietor to larger firms led by a structured management team. With close relatives often involved we know it can be difficult to separate business from leisure, with challenges or potential issues arising with family dynamics, investments and succession planning.
However, not all complications need to be settled in court. Mediation can be a useful process to help reach a successful solution that works for everyone involved.
What is mediation?
Mediation is a voluntary form of dispute resolution, where an impartial third-party facilitator helps people to find their own solutions. A final decision is never forced onto the participants, with the mediator there only to guide those involved through the various options available to them.
It is particularly effective in situations where power imbalances and deadlocks between family members must be overcome.
What disputes can it solve?
Mediation can be effective for the majority of family business disputes, including:
• Succession planning
• Bringing new people into the business
• Diversification
Once a persistent issue begins to get out of hand, mediation should be considered.
How much control do participants have?
Mediation allows the participants to have ownership of the process, and in what can be emotive circumstances, this can make all the difference. They can adjust the amount spent on sessions, the time scale the sessions are held over, and who takes part in the discussions.
What does the mediation process look like?
Although emotionally challenging, the process itself is simple. To assess whether a case is suitable for mediation, mediators speak to each party separately first. If it is suitable, a joint session is arranged, the main topics for discussion are identified, and an agenda is created. Flip charts are used to allow the situation to be visualised and contrasting opinions are talked through. Mediation will usually comprise of three to five sessions spread over a few weeks.
How to ensure mediation is a success
An open mind is vital for families entering into mediation. Unless participants are willing to listen to the opinions of others without instant disregard, there is no point in them taking part in the process. Everyone must also feel comfortable with the mediator, as they need to be happy sharing their honest views in front of this person.
When people are living and working with family members, it can be difficult to separate the two worlds. However, mediation can stop disputes from carrying over into family life, ensuring bonds are maintained and businesses continue successfully.
Understanding the mediation process
Having advice from a solicitor during your mediation process and involving them from the beginning, can provide a huge advantage. Mediators are completely impartial and cannot provide any legal advice, it is therefore crucial that you obtain your own independent legal advice to fully understand the legal issues in dispute. Solicitors are familiar with the mediation process and are able to provide assistance throughout your journey, from start to finish.
It is also very important keep in mind that an agreement made in mediation is not legally binding, however, you can instruct a solicitor to draw up the necessary paperwork to make it legally binding.
For further advice around mediation, contact Helen Bowns or any member of our family team, or click here to get in touch.