In Search Of Help

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Although there is no official tabulation, it is a reasonable assumption to make that, as in divorces, estrangement among business partners is increasing. At least one statistic -- the number of cases submitted to the American Arbitration Association for arbitration -- supports this unfortunate conclusion. Partnership disputes there rose from 130 in 1980 to 231 in 1982, or 78% in two years.

If partner contentiousness is rapidly on the rise, sources of help are only grudgingly so. Some attorneys have already switched specialties from bedroom to boardroom, but only recently have mental-health practitioners looked to business bickering as a field ripe for practice. Although rare right now, business therapists may hold the best hope for partner reconciliation (and their fees are tax deductible, provided that the business, not the individuals, pays for the treatment). Predicts psychologist Mardy Grothe, an ex-marriage counselor who has recently made the crossover (see text), "Ten years from now there's going to be a whole new specialty: taking principles and concepts of marriage and relationship therapy and applying them in business contexts. Partners are going to see that it's in their best interests to have people they can count on."

In the past, says Grothe, contenders might have called in another business affiliate unskilled in the subtleties of getting along together, who would starkly admonish them to stop arguing or lose the business. "It's good advice," admits Grothe, "but it's not going to solve the problem." The corporate attorney or banker will do the best he can to bring the partners back together, but his view of what has to be done could be colored by consideration of biting the hand that feeds him.

Professional "marriage" counseling may be new to the business arena, but professional third-party referees are not. The American Arbitration Association, a nonprofit organization with 60,000 expert arbitrators, is the largest such service, and has been settling internecine business squabbles as an alternative to litigation since its founding in 1926. In contracts that establish business relationships, it is common practice to insert a standard AAA clause that requires that all parties submit to binding arbitration even if only one seeks it; without such a stipulation, all must ask. Fees to cover costs are determined on a sliding scale based on the dollar amount of the claim. The process is informal and the decision is absolute. If the parties have an AAA clause in their contract, they are bound by AAA rules of arbitration, rather than the rules of municipalities or states. AAA's main office (there are 26 regional offices) is at 140 W. 51st St., New York, NY 10020, (212) 484-4000.

As an alternative to organized third-party arbitration, squabblers could shanghai a man off the street and ask him to arbitrate. But more often, an objective expert, such as an accountant, is summoned by all parties and granted the power, in writing, to adjudicate the issue. What he says goes -- again, under rules separate from the legal system.

Although in their favor is the fact that everyone gets together in one place, some lawyers are chary of arbitration clauses, since an arbitrator isn't bound by law or even by what an agreement stipulates and because there is no appeal of the ruling. Often, many lawyers feel, mediators don't know what they are doing; in court, the procedures are reliable, if expensive. But even lawyers recognize that, given suits that can run into six figures nowadays, litigation can be self-serving. "The only ones who make out are the law firms," admits one attorney in the field, particularly if they latch onto an "ankle-biter" -- a client who wants to chew up a bated partner no matter what the cost. That partner, of course, has to hire counsel to try to undermine the other.

When animosity gets so far out of hand that a company's creditors and employees are threatened, a court-appointed receiver may intervene. Any aggrieved partner who wants to leave the company, but can't reach an agreement on how to do so, may ask the court for an evidentiary hearing to determine the necessity of the action. The court must be convinced that the dispute can't be resolved by other means, or that fraud or gross mismanagement is involved. If the bills and workers are getting paid, however, it is unlikely that the court will waste its resources.

But such a step is radical surgery, indeed. "A court-appointed receiver is hardly a blessing," comments another lawyer. "Rarely can someone run your business better than you. The guy comes in cold. You pay the receiver and you pay the lawyer that he, in turn, usually hires. It's expensive as hell."