By Paul Sandford
Siblings Hazel and Jo are highly accomplished software experts and computer engineers who set up their own niche company, Prime Solutions Ltd, approximately two years ago. Because neither of them is very good at either management or marketing, a year ago they decided to engage Hazel’s brother-in-law Martin as “director of operations” and gave him a vaguely drafted brief to “sort out the accounting system” and “implement and operate a proper marketing strategy”. Martin was given a generous commission-based remuneration package and a 10% shareholding in the company with an option to purchase further shares.
Some members of Hazel and Jo’s family see Martin as a highly accomplished and capable professional while others think that he is “a bit of an operator” who cannot be trusted. Hazel and her husband have misgivings about his appointment but Jo’s insistence holds sway.
However, Jo subsequently comes to agree with her sister that Martin’s appointment was a bad move. It turns out that the company accounts are in a sorry state and, whilst he has worked quite well with the few existing business contacts that Hazel and Jo had established before his appointment, Martin does not introduce any new clients.
Discussions about Martin’s perceived poor performance become heated. Family members who up till now have nothing to do with the company start venturing opinions and, fearful that their dispute with him will escalate, Hazel and Jo tell Martin that his contract is terminated “forthwith”.
Never one to take things lying down, Martin threatens legal proceedings and says that he will report the company to “Companies House” and what he terms “the financial regulator”.
Informally, a solicitor friend of Hazel’s advises that if this matter did go to court then the costs could “easily” exceed £100,000 plus VAT. The company accountants are very concerned about the impact that a protracted legal dispute would have on the company’s finances and reputation so, at their suggestion, Hazel, Jo and Martin all agree to go to mediation.
In the course of initial brief discussions with the parties conducted by the ASM Plus director, it becomes apparent that although there are a number of areas of disagreement, there is some common ground. It is clear that in reality none of the interested parties has an appetite for costly litigation and they are all concerned to ensure that their reputations remain intact. Hazel and Jo accept that they are going to have to buy Martin out. In reality Martin is happy to accept a “satisfactory” payoff and will bow out gracefully.
Accordingly, instead of mediation, a day-long facilitated meeting costing a total of £1250 plus VAT is suggested. A morning’s discussion and negotiation results in an agreement being signed during the afternoon that all parties are happy with. They take the opportunity offered to speak plainly and openly and guided by the facilitator, focus on the key issues. In so doing they save themselves hours and hours of time and avoid the hundred thousand pounds plus costs bill that Hazel’s solicitor friend warned of.
As part of the agreement Martin relinquishes any right that he might have to purchase company shares and the company accountants then take the opportunity to very quickly sort out the accounts without any interference from him.
Principal Director of ASM PLUS, civil/commercial, workplace, employment, family and educational mediator and trainer with a judicial/legal background. He has knowledge and expertise in dispute resolution in a wide range of areas and disciplines and mediates online.