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WHEN SMALL BUSINESS CO-OWNERS FIGHT

Disputes among co-owners in a closely-held business can arise over a number of issues, such as day-to-day control, compensation, or access to information. Left unresolved, these arguments can fester and eventually destroy the business.

Not only are small business co-owners like a family– they are likely to be members of an actual family. While we know that family-owned small businesses tend to weather management storms better than businesses which lack that link, family dysfunctions can seep into management of the business.

Co-owner mediations can seem more like divorce negotiations than business disputes. A mediator can calm parties’ anger, help resolve the current dispute, and create a plan to manage future disagreements so the business survives.

When you are in the middle of a co-owner dispute maelstrom, call me to discuss whether mediation can help. It’s free and completely private under California’s strict mediation confidentiality laws.

The One Thing You Can Control in Negotiation

Here’s a basic fact of life. People like to feel in control, whether it’s at their workplace, at home, or in a negotiation. But we are seldom in sole control of any of those situations, and that’s how disputes arise and continue. Though the result of a negotiation is not completely under your control, your preparation is.

Start by defining the pivotal issues. There are seldom more than five, usually just one or two. Determine the specific range of results your side needs to bring the matter to conclusion.

Imagine the circumstances from your opponent’s point of view. Be specific. What is the hot button? It’s usually not just money. The emotional or reputational costs as well as the financial drain of drawn-out proceedings may be factors. Many litigants feel they have been disrespected. Sometimes a carefully worded apology goes a long way towards bridging a negotiation gap. What does this person really need?

It Takes More Than Two
Bringing everyone together for mediation shows a serious intent to resolve the dispute. Make sure the real decision-makers are attending. That might be a corporate higher-up like a claims manager, but it might also be a family member.

Using the mediator as a buffer between parties can magnify the effectiveness of your message. Your opponent may have brushed off your arguments before, but will listen to them when they come from the mediator.

You cannot completely control a negotiation. The opposing party could surprise you in a number of ways. Your own client may surprise you. But thorough preparation will help you manage a negotiation. You are the one person you know you can control.

A Real Life Lesson Why It’s Almost Always Better To Settle

LaQuan Tremell Taylor’s injuries were horrific. The 27-year-old veteran, was robbed, carjacked, and shot in the parking lot of a Kroger grocery store in Atlanta, Georgia. After three weeks in a coma, roughly a year in the hospital, multiple surgeries, and millions of dollars of treatment, plaintiff’s spinal cord injury left him a partial paraplegic with scars over his entire body and continuing pain. Kroger was the primary defendant in his suit for the store’s negligent failure to maintain adequate security.
Kroger’s insurance stacked thusly:
$3,000,000 self-insured retention (SIR)
$2,000,00 ACE American Insurance Company.
$25,000,000 Starr Surplus Lines Insurance Company
$25,000,000 Great American Insurance Company Of New York
Excess above Great American: XL Insurance America and Chubb Group of Insurance CompaniesPlaintiff’s pre-trial demands were within Starr’s coverage limit. But Starr refused to settle. The final judgment exceeded 61 million dollars. It appears that Starr did not attempt to mediate a settlement until after judgment was enteredNotwithstanding its ill-advised choice, Starr refused to pay more than its policy limit to satisfy the judgment. Great American settled the case and on February 11, 2021 sued Starr for reimbursement. The complaint for declaratory judgment alleges that Starr had acted in bad faith and was “stubbornly litigious.” Great American has asked for reimbursement of its settlement contribution plus attorney fees and expenses.

I see many cases that, like the Taylor case, clearly have the potential to “blow up.” Cases settle when parties are willing to spend the necessary time in good faith mediation and make reasonable settlement proposals. When parties are “stubbornly litigious”, the results can be disastrous.

And Then There’s . . .
In workers compensation cases, being “stubbornly litigious” can mean denying requested medical treatment. Often, though, alternative treatments end up being more expensive in the long run. Patients who cannot get treatment through the usual process sometimes end up in emergency rooms, incurring a much larger bill.
 

Authorizing a quick, “expensive” treatment can lead to early claim closure and a less costly claim overall. Sometimes the injured worker ends up undergoing the procedure which was originally requested anyway. And don’t forget the administrative expenses of utilization and bill review.Patients aren’t doctors. Patients are not writing the Requests for Authorization. Almost every patient will prefer conservative treatment to life-threatening surgery. Sure, there are malingerers and patients who exaggerate their pain in the hope of scoring heavy-duty medication or just gaining attention. And, yes, some doctors overtreat to increase their fees. Independent doctors, claims personnel, and defense attorneys have heightened their awareness of those patterns.

Don’t lose sight of the forest for the trees. Like Starr Surplus Insurance, a “stubbornly litigious” stance can end up costing you more in the end.

Are You Serious?

The #1 predictor of mediation success is whether the participants have come with a seriousness of purpose. They understand that mediation is their best chance to avoid delay and expense, not to mention a bad result. They have readied themselves to settle the case.

Why Are You Here?
Sure, the court may have ordered the parties to mediation. Look at this as a blessing. You might have struggled to get your opponent to the negotiating table. Now the court has done this for you. Moreover, instead of having to deal with insincere posturing, the mediator can filter communications to get to the crux of the dispute.The participant who only comes to mediation because “opposing counsel wanted to do this” is throwing away an opportunity and dishonoring the client.Have You Prepared?
Mediation helps parties resolve disputes efficiently. Yet, both attorneys and their clients often show up for mediation completely unprepared. Being prepared doesn’t just mean knowing the facts and law of your case, though some mediation participants even disdain this basic step.

Before coming to mediation, double-check whether you have followed the mediator’s pre-mediation instructions and requirements. This is doubly important in an era of remote video mediation.

Evaluation is Key
Take the time to thoroughly evaluate your case. Don’t think you can come in with an extreme number and wing it. Be prepared to explain your proposal, including why it is reasonable. What calculations were involved? Have you researched similar issues online so you can show how those precedents apply or are different?

The next step is to educate the client about that evaluation and plan your negotiation. Make sure you know who can grant settlement authority and line it up in advance of the mediation. The ultimate checkwriter should attend the mediation.

Come to mediation ready to settle, and chances are high you will.