Disputes are a normal part of any relationship: be it business, personal or professional. When business mixes with family, disputes would seem an unavoidable part of the deal. For such a reason, litigation would be a route that most would want to avoid due to cost, time and the tensions placed on parties involved. In general, most suits settle prior to trial and a majority of these via mediation. Judges also recommend that parties settle prior to trial.
As we have discussed on our previous blog posts, Mediation is a way to appoint a neutral third party, often a retired judge or attorney with a vast amount of experience, who will resolve the dispute between both parties utilizing a problem-solving approach. These sessions are confidential and a way for parties to explore and resolve issues.
For privacy reasons, and for a quicker resolution method, it would appear that such measures are more viable if a dispute was to occur within a family owned business. Such cases may involve the ownership or management of a family-owned business are at issue, settlement agreements also can include provisions requiring, for example, transfers of shares, changes to corporate governance processes, or changes to a family member’s employment or other involvement with the company. Even if the parties begin to litigate their disputes, but then proceed to mediation, a judge will typically enforce a settlement agreement reached by the parties through mediation.
A recent decision illustrates how the mediation process plays out in the context of ongoing family-owned business litigation. An example of an ongoing family-owned business litigation and the analysis of the enforceability of an agreement reached through mediation occurred when one brother sued his two brothers due to an alleged breach of a contract through which they purchased a share of a family business and also that they misappropriated a portion of their mother’s estate to his detriment.
During a mediation, the parties agreed to terms and signed a settlement agreement before an experienced mediator. The settlement agreement did not state that the parties would draft any additional terms of the settlement. Over the next several months, the parties attempted to settle other terms that were not agreed on. One of the brothers thereafter disputed those terms and then a motion had to be filed seeking to enforce the settlement agreement.
In the Court’s analysis, it indicated that the key was whether or not the parties reached agreement on material terms. Part of the terms included that payments be made in exchange for dismissal of lawsuit and non-pursuit of criminal proceedings. As such, they reflected a material aspect of settlement and were considered to be binding and enforceable. Accordingly, the case was dismissed.
Thus it can be seen, parties are encouraged to settle outside of court and abide by agreements. If any terms of a settlement are reached in mediation, they should be documented in order to prevent any further legal complications. Having clarity in purpose and writing avoids any expensive legal costs. For that reason, bringing a lawyer into a mediation is not a bad idea. Please feel free to discuss this issue with our law firm if ever required.
https://www.lexology.com/library/detail.aspx?g=a9fe321c-a74b-4687-90a3-2a7348856c08Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorneys Patrick Austermuehle and Andrew Murphy Rising Stars in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex class action, copyright, noncompete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our Naperville and Schaumburg business dispute lawyers, civil litigation lawyers and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also assist businesses and business owners who are victims of fraud. You can contact us by calling (630) 333-0333 or our toll-free number (833) 306-4933. You can also contact us online here.