While attending a quarterly meeting of the four owners of a 22-year old, highly successful boutique advertising agency, I sensed, as “outside” corporate counsel, that something was “wrong” in the room.  It quickly became apparent that the co-owners, who had met as “poor students” in college and had realized great economic success through the ad agency they had co-founded, were seriously unhappy with one another.  Though I am a “neutral” mediator of business disputes, I suggested that we bring in a neutral mediator wholly unfamiliar with the situation.  That suggestion was greeted by four voices simultaneously saying, “You do it!”  After some discussion of potential conflicts, I proceeded to serve as the neutral mediator.  

Neutral mediation of disputes among co-owners of a business can be the key to the business’s survival.  Disputes tend to surface, particularly during difficult economic times, when profits are down and anxiety is up.  “Current” disputes often evolve out of issues that have been swept “under the rug” during better economic periods.  If not brought to the surface for “airing,” they tend to cut into the fabric of the interaction among the co-owing “team.”  Over time, this internal conflict can result in a loss of consensus over the direction of the business and to the breaking up of the “team” into groups that often operate at cross-purposes with one another.  Ultimately, the business loses focus and profitability is impacted.  Disputes can lead to long and costly legal battles and to ultimate dissolution of an otherwise successful business.  

Through the “neutral” mediation process, the four ad agency co-owners were able to reshuffle the deck and allow the business to move forward, as a result of: (i) recognition and acknowledgement by the agency’s “original business developer” that one of his colleagues had infused the agency with a newer and more vital base of clients; (ii) the departure of a third co-owner who had grown tired of the traditional ad agency business and wanted to try his hand at alternative marketing strategies; and (iii) the resulting “calming” of the fourth business owner who, as the chief creative force, had lost his edge amidst the emotional turbulence which had beset the business.

If the relationship with your co-owners has deteriorated during stressful economic times, consider “neutral” mediation.  

by Joel L. Fishman

Joel Fishman has worked almost four decades as a business lawyer and mediator of business disputes. Representing large, middle market, and entrepreneurial businesses in a broad range of industries including entertainment, communications, new media, and technology, Fishman represents clients in the formation, financing, operation, and expansion of businesses, as well as with the leasing, purchase, development, financing, and sale of all types of real estate. Fishman is active in the Southern California community, and he frequently writes for the Los Angeles Daily Journal on mediation as well as corporate and real estate legal topics.