In many areas of business, mediation is being used increasingly as an effective and more cost-effective tool for resolving disputes without the time and cost involved in taking the matter to Court.
We are grateful to Carolyn Jones, who is an experienced accredited Civil, Commercial and Online Mediator and Insolvency Specialist, for this article, which details how mediation can help struggling businesses, along with a case study to illustrate her points. Carolyn is well known to us here at Antony Batty & Company, especially to our Thames Valley office.
We finish the article with some words from one of our Directors, Insolvency Practitioner Lawrence King, who is also an accredited mediator, about mediation in the world of Insolvency.
When business problems become personal
“When businesses struggle, the people working in them and with them can struggle too. When families and business partners fall out, businesses can fail as a result. Disagreements become conflict, positions harden and people stop listening, focused on their own problems.”
What can break the doom-spiral?
“How can this doom-spiral be averted? One answer is to introduce an independent neutral – someone with no agenda and no personal exposure to the problem. A professional mediator is just that sort of person. Hired by all those who need a solution to be found, they use tried and tested methods to gain an understanding of the problem and the trust of everyone.”
Is mediation only for court cases?
“People sometimes think that mediators are only used in big litigation cases or marital disputes but this isn’t true. Mediators can be appropriate for all kinds of problems and often help to resolve conflicts before court proceedings start. Also, if everyone agrees that mediation is worth trying, it should be possible to find a mediator with the right skills and capacity to help quickly at a manageable cost.”
Can entrenched positions be softened?
“The parties can have adopted very entrenched positions. A skilled mediator can help them to see more widely what benefits there may be to settlement. Sometimes information presented may seem incomplete or difficult to accept. The mediator may be able to suggest ways of working around these issues.”
Why does mediation work so well?
“Mediation can be a useful way of exploring dispute resolution because it works within the context of a managed but flexible process which is confidential to the parties. When parties trust the mediator with their real concerns and needs, the mediator is put in a position to see the bigger picture and the possible ways around the roadblocks which are holding up a resolution.”
What if people can’t meet in person?
“If there are logistical difficulties in bringing all the necessary parties together in one place, an online alternative can work well.”
Why is a court-imposed solution often the wrong fit?
“Experience suggests that mediation is capable of cracking even the hardest of nuts and even the most cynical may be willing to accept that it is best if parties can try to find their own solutions, rather than going to court and having a solution imposed on them. Very often the answer which will save a business is not an answer the court can give and won’t involve a decision about who is right and who is wrong. Many cases settle on the day of mediation and a signed agreement also reached.”
Case study: Doom Spiral Limited
“Here is an example which illustrates how a mediation might work in practice.*
Doom Spiral Limited, a small engineering firm, had historically achieved annual turnover of £12m, enabling its two directors and equal shareholders, John and Katie, to draw annual remuneration of £70 – 80k each. In the last two years, turnover has declined sharply, and distributable reserves have only allowed annual remuneration of £30k each.
John blames Katie for focusing too much on developing new products rather than chasing sales. Katie blames John for what she perceives to be a lack of commitment, failing to adopt digital marketing and losing key customers. Each has reasons for refusing to resign:
- John wishes to preserve the company for his children’s future involvement.
- Katie has invested significant personal time and even some of her own funds into recent R&D and wants to see a return.
- John is secretly facing personal debt issues and cannot afford to step away.
- Katie fears John would sell the business to a competitor she distrusts.
Both directors are partly at fault: John resisted necessary operational changes and has been trying to make ends meet with a side-hustle, while Katie authorised costly R&D without securing customer commitments. Their dispute has caused delayed decision-making, high staff turnover, and loss of a major customer contract.
Recognising the risk to the company’s survival, they engaged a mediator. The mediation allowed each to share confidential concerns privately (in caucus) and helped them refocus on shared goals. A settlement was reached: John agreed to step back from day-to-day management, taking a non-executive role with a fixed remuneration, with Katie taking operational control under a new business plan focusing on commercial growth. They agreed to quarterly board meetings with independent financial oversight to improve transparency and a clear plan for the recruitment and retention of new staff.
This solution preserved the business, provided clarity for employees, and allowed both directors to protect their personal interests while restoring stability to Doom Spiral Limited.”
(*this case study is entirely fictional and is for illustrative purposes only. Any coincidental reference to any real-life scenario is not intended.)
Insolvency Practitioners can also be Mediators
Carolyn is a qualified solicitor with over 25 years insolvency experience and now acts as a full-time mediator. Both Carolyn, and our own Lawrence King gained their mediator accreditation from the ADR Group and often work together.
As Lawrence points out, Insolvency Practitioners can also be mediators, not least because there are many disputes in Insolvency cases, where having a mediator with a background in insolvency is a major benefit:
“The commonly held belief is that mediators must be solicitors, barristers or retired legal professionals. Many are, of course, but you do not need to be. Inevitably, in Insolvency Disputes, you need to have a good knowledge of Insolvency Law, which of course all Licensed Insolvency Practitioners do as part of their professional qualification. Add to that the accountancy training of most IPs, and it is easy to see why an IP can bring a different perspective to dispute resolution. In particular, the ability to condense complex legal and financial matters quickly is key.”
The key to Mediation is problem solving
At the heart of dispute resolution, of course, is problem solving and being able to communicate effectively, as Carolyn demonstrates in her case study above.
Mediation requires a pragmatic and commercial mindset to be able to act as a neutral intermediary between two parties who are locked in disagreement. A good mediator also needs good listening skills – which Carolyn has – and it is certainly not a case of deciding who is right and who is wrong. There is no taking of sides, and the focus is always on reaching an agreement that both parties can live with.
Find out more about Mediation
If you, or a client, are involved in a general commercial (Carolyn) or insolvency dispute (Lawrence & Carolyn), and would like to avoid lengthy legal proceedings, bring the dispute to an early close, save money on legal costs and save yourself a great deal of stress, please contact us or call us on 01235 507001 for a free of charge confidential initial chat. If it is more of a general commercial dispute, we will happily put you in touch with Carolyn.
