A shareholder dispute need not result in a messy divorce
When you specialise in dealing with shareholders disputes you become more of a commercial divorce lawyer than a commercial litigator. The passions that can be aroused in a dispute between the shareholders in a business are as intense as those which my colleagues in the family law sphere are used to dealing with. How to avoid these passions killing the golden goose in boardroom disputes is a perennial problem.
As any lawyer dealing in this field should know, the law is a very blunt instrument and the chances of it achieving a quick, cost effective or fair result are in most cases fairly slim. In addition, in most cases protracted litigation will weaken or even destroy the business that is being argued about.
For this reason, alternative dispute resolution (ADR), and in particular mediation, should be at the top of the agenda in any analysis of how a boardroom dispute can be resolved. These days even the most macho of litigators will accept that mediation is a useful tool (and not “just for wimps” as one city lawyer once opined to me). However, the problem in getting parties to engage in the process still remains and the role of the lawyer is absolutely critical.
Just like in a divorce the passions and heat generated by the dispute can obscure the commercial realities and cause otherwise sensible people to embark on a course that risks destroying the value in the business they are fighting over.
The stumbling blocks to resolving shareholders disputes are often the same two old chestnuts, which regularly crop up together:
1. a client who wants his or her “day in court” come what may, and
2. a lawyer advising them who either does not fully appreciate the legal context or is insufficiently robust to persuade their client to instead take a long hard look at their objectives and how best those can be achieved.
There will always be clients who don’t listen to their lawyers and in those cases litigation is sometimes inevitable. Likewise there are lawyers who are gung ho because they are inexperienced in the field and then again litigation is more likely. But the combination of the two is the hardest nut to crack and a situation that can be incredibly frustrating.
Lawyers in the family law area, who experience the same basic problems, have come up with a solution which is starting to catch on. It is called collaborative law. The lawyers (and clients) involved sign up to a non-confrontational process with the specific aim of producing a just and fair result, quickly and (relatively!) cheaply. It ensures the interests of all participants are aligned with the task of achieving a sensible outcome for the parties involved.
Perhaps one day somebody will come up with a similar scheme for likeminded commercial lawyers who are more concerned about outcomes than posturing in court. Until then, there will always be the lottery of finding out where on the “yes we can do business with them” scale the opposing party’s lawyer falls.
At one end of the scale are the lawyers and firms (it is often a cultural thing in firms) who are genuine commercial litigators. Always a relief to see their notepaper drop on the desk or their logo into the inbox.
On the other end of the scale are the mad, the bad and the dangerous to know. Litigators who seem to operate in a vacuum without regard to the commercial context or the real interests of their clients. A dread day for both lawyer and client when their notepaper wings it way across.
The moral of this article is simple. Choose your lawyer wisely and be aware that the best advice you get might not be the advice you want to hear.
Tags: ADR, mediation, shareholder disputes, Shareholders disputes
Boardroom Dispute Resolution, Shareholders disputes | Ed Weeks | 
February 18, 2010 9:20 pm
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