Spiralling partnership disputes and “partner-exiting climate” encouraging specialist ADR

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By Legal Futures

5 January 2011


Let's be friends: mediation can offer significant benefits

A spiralling number of partnership disputes is encouraging the development of specialist alternative dispute resolution, experts have said.

It has led to the Association of Partnership Practitioners (APP) launching a Directory of Partnership Dispute Arbitrators and Mediators.

The APP said court statistics show the High Court heard 106 partnership dispute cases in 2009, compared with 54 in 2008, at a time when the number of new cases overall in the Chancery Division fell 5%.

APP chairman Simon Bevan, senior partner of accountants BDO, said: “In the partner-exiting climate that we have experienced during 2010, there seems to be every likelihood that the 2009 figures will be exceeded in 2010. For every partnership or LLP dispute in the High Court, there are undoubtedly many more arbitrations behind closed doors, as most professional practice agreements these days contain an arbitration clause. And for every partnership or LLP dispute in the High Court or in arbitration, there is usually a mediation that either precedes the commencement of proceedings or occurs at some time before trial.”

An APP workshop recently debated the relative merits of mediation and arbitration as methods of resolving partnership disputes. Workshop chairman Peter Garry, head of the partnerships and professional practices group at South East firm Cripps Harries Hall, said: ”Our very experienced arbitrator and mediator speakers highlighted the differences between their respective approaches and the different outcomes that can result. There are significant benefits to be gained by designing a mediation process that fits the needs of the participants in a partnership dispute, particularly a multi-party dispute, and considerable savings in costs can be made. On the other hand, sometimes there are issues that the parties are never going to agree on, and arbitration can provide certainty and finality, often quite quickly.”

Mr Garry, an APP committee member, led the project to set up the directory. He said: “What we are trying to address and rectify is the situation in which parties who are not already aware of a suitable candidate, upon whom they can agree, are dependent on the recommendations of appointing bodies. Our aim has been to become the first port of call for anyone looking for a partnership or LLP dispute arbitrator or mediator.”

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We all know that nothing in life is certain. As the actor, director and philosopher Clint Eastwood once said: “If you want a guarantee, buy a toaster.” He also said he’d tried being reasonable and didn’t like it. They should teach this kind of philosophy in law school. One thing in life is reasonably certain though. If you’re a law firm worth your salt, at some point you will be approached by another entity (most probably a work introducer) with a whizzy idea to ‘partner’ with you to ‘help you accelerate your growth’. In commercial speak this means, ‘we’d like to keep feeding you work but we’d also like to share in your profits’. The arrangement may be pitched to you as a joint venture – a win-win no less.

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