Do You Need a Lawyer or a Mediator for Your Partnership Problem?

Chris, maybe I should call a lawyer instead of a mediator. My problem is pretty serious. What do you think?

Lawyer or Mediator: What’s the Difference?

Lawyers litigate. Your lawyer can only represent you. That means your partner will need a lawyer if you get a lawyer. Things get expensive fast when you have two people charging $400/hour. Taking your action into court will cost YOU around $50,000 at a minimum. (125 Hours. That’s only 2 1/2 weeks!)

Mediators sit down with all the parties and try to find common ground. Mediators charge around $400/hr. and typically have minimums of 6-8 hours per day or a total minimum case cost of $10,000. (Note: I charge considerably less and have no minimums.)

It sounds like mediation is the way to go, right? Maybe not.

What’s Your Desired Outcome from your Partnership Dispute?

This is the most important factor to decide whether you need a lawyer or a mediator.

What does fixing your dispute involve? If you want your partner removed from the business because she violated her fiduciary responsibility and harmed the firm, you’ll need a lawyer. Any time you ‘require’ action against your business partner, you’ll probably need a lawyer unless your partner agrees to the punishment. It’s possible. I’ve seen things get so bad that a partner will walk away from a business, but the departing partner is rarely the offender.

Other Situations Where You’ll Need a Lawyer

Your partner may be embezzling from the company. That can be a criminal act and you may need a lawyer to help you get enough attention that the local jurisdiction will prosecute. (Don’t hold your breath) You’ll probably have to sue for damages. A lawyer is needed.

If your partner is filing false tax documents, you will want a lawyer to protect you when the walls cave in. Any time a partner is willfully breaking the law, you had better speak with a qualified business attorney.

What if You Want Out of a Business Partnership?

A good mediator can negotiate a buyout. I also advise clients on the terms of a buyout if the other party is merely belligerent. I can mediate the buyout on behalf of the business or I can work as your representative or adviser to obtain a fair buyout.

If your Partnership Agreeement sets terms for a voluntary exit from the partnership but your partner refuses to honor the agreement, you’ll need a lawyer to enforce that.

Sometimes I Work with the Client’s Lawyer

There are cases where I work with the lawyers involved as an intermediary, a go-between, to facilitate reaching an agreement without going to court.

Get Advice First

I have two goals with every new client. #1, provide help. #2, be prudent with my client’s money. If you call me about your partnership problem and I think you should call a lawyer, I’ll tell you. That’s why I always give a free consultation to every new potential client. I can determine if you would be better served by calling an attorney. I don’t mind at all.

Also, there are times when I recommend that we first take a stab at trying to fix things before calling an attorney. Just don’t wait to act. Bad business partnerships get worse with time. Don’t wait to call.

Best wishes for your success,

Chris Reich, Business Mediator

“If you have a business partnership that is going sour, get qualified advice. These things get worse with time, not better.”