We all know that divorce is typically an expensive and stressful process. However, what most people don’t realize is that the same financial and emotional pains are felt when business owners are in a dispute. When differences seemingly can’t be resolved, business owners need not always hire lawyers to litigate. Business owners should be wary of litigation, as there may be such immediate consequences as:
Ceding control of the business. The business is placed in the hands of lawyers and judges who likely have limited knowledge of the business and how it should be run.
Losing the right to make financial decisions. Owners must seek court approval before making any decisions which might affect the business.
Wasting money. Lawyers are often paid from the business’ profits before the owners share in those profits.
A smart alternative to litigation is mediation, which can be effective for several reasons:
Parties can choose to participate without lawyers and pay only the mediator and other necessary experts, such as accountants or consultants. Even if lawyers are hired, the expense is considerably less than the cost of lawyers trying a case.
Mediation allows business owners to control the pace of negotiations, rather than ceding that power to a court-imposed schedule.
The process is confidential and not admissible in court, allowing parties to be more open in resolving their dispute.
Mediation is a way to bring parties involved in a dispute to a quick, painless resolution. While there is no doubt that some disputes may need to be litigated, business owners have this option to resolve their differences without going to war with each other. They’ll likely save money in the process.
This article was written by Silvana Raso and published in Bloomberg Businessweek magazine.
