Using Mediation to Resolve Business Partnership Issues

Mediation is becoming widely used in a variety of settings, but it is still not as well-known for resolving partnership issues. With partnerships, the issues that arise are as varied as the individuals involved. Although business partnership issues deal with many of the same themes, every situation is unique, and a mediator can help partners come to agreements on specific matters that will significantly impact the business in numerous ways.

Mediation is one of the best methods of alternative dispute resolution (ADR), and it can be effectively used to resolve business partnership disputes before they escalate into a costly legal battle. A mediator can bring a strong outside perspective to the situation without any pre-set agenda, and without being judgmental. Most people would agree that someone who does not have a vested interest in the outcome will be able to approach a conflict from a far different angle than those who are embroiled in it.

Another way mediation can be helpful is by fostering free and open communication between the participants. An experienced mediator is highly adept at guiding the conversation, uncovering the issues that really matter, and helping participants resolve these issues without getting too emotional. The mediator will keep the communication going, look for common ground, and begin to propose workable solutions that those involved may have had a difficult time arriving at on their own.

Although conflict resolution is one of the major areas of a business that mediators can help with, it is by no means the only one. Partnership mediation can be used to handle many other aspects of a business as well. These include:

  • Creating Business Operating Agreements: Every business partnership should have an operating agreement that lays out in writing the responsibilities of each partner, decision-making authorities, percentage of ownership, how money will be handled, and other important matters. It is often highly beneficial to develop this type of agreement with the help of a business mediator. The mediator will again be able to bring an outside perspective, and he/she will most likely bring up critical issues that the partners may not have considered.
  • Updating Business Operating Agreements: As a business partnership evolves, the time will come when it might make sense to revisit an operating agreement and make updates to it. For example, maybe you are taking on a new partner, or one of the partners is leaving. Or maybe you have opened a new location or gone into a new area of business. These and other major changes will necessitate changes to the operating agreement.
  • Employee Disputes: Conflicts do not only happen among partners and owners; they can happen with employees as well. It could be a dispute between two or more employees, or it could be between an employee and a supervisor or an employee and one of the partners/owners. There are unique dynamics at play with each of these situations, and a skilled mediator can help the parties work through their issues and guide them toward a peaceable resolution.
  • Disputes with Outside Parties: A dispute may extend beyond the business to third parties, such as vendors and others you do business with. Conflicts with outsiders are much more likely to end up in court, and this can exact a major toll in terms of both time and resources and cause irreparable damage to the business. Mediating an outside conflict can often help put the dispute to rest in the most practical, effective, and cost-efficient manner.
  • Buyouts: There may come a time when one of the partners wants to leave the business. This could be over irreconcilable differences, or it could be due to life circumstances such as retirement or a health issue. Whatever the case, it will be very important to work out reasonable terms and conditions for the buyout that everyone involved is happy with.
  • Partnership Dissolutions: Sometimes, partnerships reach the point where it is time to call it quits. As with buyouts, partnership dissolutions need to be handled cleanly and in a way that is fair and equitable for the parties involved. This means filing the proper paperwork, making sure all outstanding debts are paid, and fairly dividing all remaining assets.

Mediation is Good for Business

Business partnership disputes are most common when there are problems within the business and tensions are higher. Mediation not only treats the symptoms (i.e., the surface dispute), but also the core issues that may create these disputes in the first place. A mediator, particularly one who has extensive business experience, can provide valuable insights to help partners operate more efficiently and profitably. This helps prevent damaging conflicts from arising and puts partners in the best possible position for long-term success.