For a minority shareholder who is being treated unfairly by the majority, mere discussions and negotiations with the majority shareholder(s) about the unfair conduct frequently do not resolve things. Too often, it would seem that one has no choice but to resort to litigation. But litigation is expensive. As a business-person, you know that just about anything involving an attorney is expensive. But litigation can be especially so. Even for someone who wants to control costs, it is often all-too-difficult to accomplish. You may have the ability to control, to a certain extent, the things that your lawyer does. But it is impossible to control what your adversary’s lawyer does. If you are unfortunate enough to have a “scorched-earth” litigator on the other side, the costs could spiral out of control. Litigation alternatives, including mediation and arbitration, are becoming more and more popular because of the cost savings involved. Mediation, in particular, may be quite useful in minority shareholder litigation. Shareholders in most closely-held businesses, especially ones that are family owned, can often count among them at least one person that all the shareholders trust. Whether this is an accountant, an attorney, a relative, or just a family friend, identifying one person that all the fighting shareholders trust is a crucial first step. That person – even if not an attorney – could act as mediator to help settle the warring parties’ dispute. If both sides have their own representation to make their case to someone that all sides at least trust, the chances of a resolution before litigation, or at least before the litigation becomes costly, is well worth the effort.
An attorney experienced in minority shareholder litigation should be able to help identify who, among trusted friends and associates, might make a good mediator to assist in breaking the logjam.