It seemed like a good idea when the wealthy, retired businessman offered to bankroll a new business for his two sons. One son was an attorney and accountant; the other had worked for a business similar to the one they planned to open.
But seven years later, the family business was faltering. The father and sons were so angry with one another they were about to hire their own lawyers to untangle the financial and emotional mess.
"The company was not as profitable as the father wanted it to be. And it wasn't being run the way the father would have run it," said a company advisor, who agreed to share the story on condition that neither the company nor the owners be identified.
"It was a very complicated situation, especially the way their finances were entwined," he said. "If they went to court, no one was going to come out a winner."
Rather than hiring lawyers, the advisor recommended the family retain David Gage, a clinical psychologist and founder of Business Mediation Associates in Washington. Gage's specialty is assembling multidisciplinary teams to solve complex family disputes or disputes between partners.
By working with Gage's mediation team, what seemed like a disaster in the making had a happy ending.
"We sat down with them and helped the son who was the lawyer split off from the father and his brother," Gage said. "The father and brother helped him financially to set up his own law practice. The other brother stayed in the business with his father."
Gage said mediators offer an attractive alternative to hiring attorneys to settle emotional business disputes.
"Turning to lawyers can be astronomically expensive for a small business," Gage said. "What partners need is help with their own negotiations. They don't need someone telling them what to do."
Unlike lawyers paid to do battle, Gage said professional mediators try to "rebuild the spirit of collaboration."
Knowing when to call in outside help is critical to saving a troubled business. Too often partners or business associates fail to admit their relationship is deteriorating until it's too late.
Here are some warning signs, according to Gage:
* The people involved are avoiding each other.
* You come to work and find decisions have been made without you.
* Communication in the office deteriorates.
* Political maneuvering sets the tone of the office.
* Emotional flare-ups and arguments occur.
If you are experiencing any of the above, it's time to get outside help.
Gage said his mediators not only get to the bottom of the dispute, but then craft written agreements to fully resolve the conflicts.
"We are not trying to ascribe blame," he said. "We try to get people back to work quickly."
His mediation teams are made up of legal and financial experts and psychologists. Gage prefers his clients to work with a two-person team. Clients pay $225 an hour for each mediator, which sounds steep, but is far less expensive than a lengthy court battle.
Once the mediation team meets with the warring parties to understand the problems, the actual mediation process can take as little as a day, or up to several months, depending on the severity of the problem, Gage said.
Meanwhile, the family business with the battling sons is in good shape.
"Through mediation, they had a chance to say what was making them unhappy," their advisor said. "If it hadn't been worked out, they would have lost $1 million or $2 million and gone out of business."
Research assistance by Robin Wallace. Jane Applegate is the author of "201 Great Ideas for Your Small Business," Bloomberg Press. For more small-business resources, visit her Web site at http://www.janeapplegate.com.