19 March 2019 - Article
In our practice, we often get an inside view of the disagreements that arise in and around family offices. Our clients frequently ask about ways to solve these disagreements short of pursuing litigation. Is there an effective way to resolve disputes while preserving relationships among parties? Yes – through mediation. While mediation has gained recognition over the years as a valuable tool for resolving commercial conflicts, the very nature of the process renders it uniquely well-suited for family office disputes. We can guide parties through the mediation process with the capacity to (i) serve our clients as their advocate in a mediation and (ii) preside over a dispute between or among parties as the actual mediator.
The Procedure. Mediation is a voluntary procedure whereby a neutral person assists parties in resolving disputes through a negotiated settlement. Unlike litigation, mediation allows the parties to remain in control of the process at all times. They are free to continue or stop the mediation at any time, and are not obliged to agree to any settlement. Where the parties do agree to settle, the agreement is typically drafted either by the parties’ representatives or the mediator.
A mediator is not a judge and has no power to impose a solution on the parties. Rather, the mediator assists the parties in fashioning their own resolutions to disputes by addressing the parties’ individual objectives and interests. This is creative problem-solving at its best, as solutions may extend to include personal and community interests as well as the strictly legal aspects of the parties’ claims.
Advantages of mediation
Informality. The parties to a mediation are encouraged to – and do – speak directly to each other. Documents are immediately shared without evidentiary concerns. The freely-disseminated information among the parties encourages all concerned to focus on dispute resolution, rather than on argument about the process.
Confidentiality. Information can be freely shared in a mediation because the process is confidential. Confidentiality encourages the parties to be open and frank about their concerns in a safe environment. This can permit parties to grasp legal and factual problems inherent in their claims or defenses and to recognize the risks of proceeding to adjudication.
Anything divulged in a mediation remains solely part of the mediation process and is not disclosed to third parties. In contrast to litigation, mediation sessions are private and not a matter of public record: all writings, reports and documents received by the mediator while serving in that capacity, as well as the mediator’s notes, are confidential. Moreover, any new information that comes to light in a meditation cannot be used in any subsequent proceeding, including litigation. Finally, settlement agreements can be drafted to keep confidential not only the terms of the settlement but the fact that there had to be any settlement at all.
Privacy. Mediation sessions are private. Only parties and their representatives may attend. Other persons may attend only with the permission of the parties and the consent of the mediator – and such persons are bound by the same rules of confidentiality as apply to the mediator, the parties and their representatives. The privacy of the mediation process encourages emotional expression that may not be appropriate in a courtroom setting. Emotional expression – including apologies – can lead to constructive dispute resolutions.
Time Saving. Because of its evidentiary informality, the process leading to a mediation is much abbreviated: there is generally a conference call to discuss the logistics of the mediation, a submission of brief memoranda to the mediator and the mediation itself which is typically a
one-day affair. Cost Effectiveness. Because of its relative simplicity and brevity of process, mediation is generally far less expensive than litigation – or, for that matter, other forms of alternative dispute resolution.
Creative and Durable Solutions. Mediation impels parties to devise creative solutions because the parties are developing options for mutual advantage. Since the parties control the process, they may fashion the outcome by taking into account business interests (including non-monetary considerations and relief) not available in a court of law. Rather than submit to a judiciallydetermined result based on past conduct, legal precedent and the merits of the case, the parties are empowered through mediation to enhance their relationship going forward. A creative settlement achieved through mediation may lessen the likelihood that another dispute will arise between the parties in the future.
Because it is a private, efficient and confidential process that encourages creative solutions, mediation is an ideal dispute resolution mechanism for parties engaged in a long-term personal or familial relationship, or an ongoing and valued business relationship. Family offices should view mediation as a boon to clients who would wisely seek to preserve valued relationships rather than to irrevocably damage them in the toils of litigation.