Disagreements are unavoidable in the business world. The owners may disagree over various issues, such as management approaches, vision for the company, etc. You will likely experience these conflicts if you are a small or medium business with fewer resources and developing infrastructure.

Owner disputes can have adverse effects on the business. They can lead to loss of customers, revenue, capital, and employees. It is in everyone’s best interest to have these conflicts resolved fast.

The silver lining is that there are various ways to resolve disputes among business owners. You may try litigation, mediation, arbitration, etc. Business dispute resolution companies can help your business resolve these disagreements.

TYPES OF BUSINESS OWNER DISAGREEMENTS

Different interests and management approaches can cause business owners disputes. For example, one stakeholder can view the organization’s latest venture to be against their beliefs. Another shareholder can consider the company’s focus on profits over employees’ welfare to be against their opinion that people should come first.

These disputes may result in various legal claims by one business owner against the others. The legal claims include:

  • BREACH OF FIDUCIARY DUTY: Breaching the shareholder deed can involve selling the company’s shares to a competitor in violation of the business agreement. One business owner may want to end the business partnership against the other owner’s wishes.
  • BREACH OF CONTRACT: A party may breach an agreement if they don’t live up to their contractual obligations. The disagreement may arise if the contractual terms were ambiguous, incomplete, or misunderstood.
  • DISAGREEMENT OVER DIRECTION: Business owners may disagree over the way the business is heading. They may have disputes over decisions, such as relocating the company, significant capital outlays, parting with a non-shareholder staff, ceasing operations, etc.
  • MINORITY SHAREHOLDER CLAIMS: A minority stake may be challenging to sell, so the minor shareholder can be part of an establishment they feel isn’t the right fit. The minor shareholder has little influence over decisions. If the majority shareholders often disregard their input, they can be unhappy because their say isn’t helpful in decision-making. They may also have issues with the enterprise’s dividends distribution, utilization of corporate funds, etc.
  • DIFFERENCES IN COMPENSATION: Disagreements may arise if the company’s compensation policy doesn’t consider the shareholders’ expertise, training, experience, and industry.

WAYS TO HANDLE BUSINESS OWNER DISPUTES

There are many ways to manage business owner disputes. The least disruptive and most cost-effective approach is to avoid litigation. Businesses can resolve disagreements via internal investigations done by the company or a neutral third party.

There are various ways to resolve disputes outside of litigation. They include:

  1. NEGOTIATIONS: In this approach, business owners can discuss their differences amongst themselves. They may participate in the discussions themselves or via third parties, such as attorneys. It may be a viable approach if the relationship between the business owners is yet to deteriorate, and they can have constructive engagements.
  2. MEDIATION: The parties work with a mediator to find a negotiated resolution. The mediator is an expert facilitator who knows human dynamics, negotiation techniques, and effective listening. They will provide expert ideas and advice towards resolving the disagreement, but the ultimate decision is up to the business owners in business mediation.
  3. ARBITRATION: An arbitrator can listen to the business owners and render a non-binding or binding resolution decision. The business owners sign a contract to abide by the decision. A panel of three arbitrators may be more appropriate than working with one arbitrator.
  4. ALTERNATIVE DISPUTE RESOLUTION THROUGH THE COURT SYSTEM: Once the parties file a lawsuit, the court can encourage them to try this approach before the case proceeds to trial. It might be appropriate if one business owner wasn’t engaging the other. The lawsuit puts them on notice, and they have to try this method to avoid being in contempt.

Avoid litigation to enjoy various benefits, such as:

« SAVE MONEY: An out-of-court settlement is more affordable than litigation. You won’t pay expensive retainer fees for attorneys. If you work with a third party, their charges are reasonable. You stop paying them when you resolve the conflict.

« SAVE TIME: You are likely to resolve the disagreement fast if you avoid litigation. The parties can spend a lot of time working out a resolution. This case might not be applicable in court. The court has various cases on its docket, so it might take months or years to reach a verdict.

« FEWER DISRUPTIONS: The business owners can find the appropriate time for out-of-court dispute resolution. They may schedule the negotiations, arbitration, or mediation when they don’t have obligations to the business. If they are busy, they can move some business operations to accommodate the deliberations. They may have more disruptions if they choose litigation.

« DECISIONS: Business owners can work out the compromise they need with an out-of-court dispute resolution. They have room to determine what each party wants, the minimum acceptable positions, and the middle ground. If they choose litigation, they may not have this luxury. Business owners are more likely to abide by the resolutions because they participated in making them.

« RELATIONSHIP: Business owners are more likely to save or mend their relationship with out-of-court dispute resolution. They are likely to have a foundation to continue their partnership after resolving their dispute with this approach. This case may not be possible with litigation. The opposing attorneys may go to extreme lengths to win, causing irreparable damage to the business owners’ relationship.

If the business owners’ relationship is so fraught that out-of-court dispute resolution is impossible, court intervention may be essential. The business owners will use litigation to discover their differences’ magnitude and find solutions via discovery and trial.

Business owners may disagree over various issues about the business, but these disputes don’t have to end the business relationship. You can work out your conflicts with the right help. Get professional business dispute resolution help to resolve your disagreements out of court. You will save the relationship, time, and money if you avoid litigation.

Contact Wotitzky Mediation to discover more about how we can help you

Consider contacting Hal Wotitzky to guide you through the mediation process.