Chances are, your firm’s management includes more than one person. Which means that differences of opinion will assuredly crop up. While many of the disputes will be easily resolved, some may not. Bill Mandel and Laura Howard, partners in San Francisco–based MBV Law, work with architecture, engineering, and environmental-consulting clients (who account for about half of MBV’s business) and have a good understanding of just the kinds of things that can come between firm leaders and put a partnership at risk. Mandel has specialized in the A/E community for 30 of his 40 years as a lawyer, Howard for 12 of 23. “I find architects very interesting to work with,” Howard says. “They’re big-picture clients.”
How did you get started in partner-dispute resolution?
Mandel: Clients turn to us as the trusted adviser. We don’t take sides. We act as a fair arbiter of their disputes.
What’s the key to resolving partner disputes?
Mandel: Do preventive medicine. Spend time getting to know your partners before getting into the partnership. Know their values. We put together a set of practices so that if they get to the dispute, they have a good way of handling it.
How do you, as lawyers, practice preventive medicine?
Howard: We build into agreements things that people are likely to disagree about: How are they going to deal with compensation? What about spending on equipment or leases or property? What are they going to do about new markets? Do they want to stay local, or do they have a more regional or global outlook? How do they feel about expanding their ownership circle and new people who may ultimately replace them? These are areas where partners have disagreements, and some of them can be preventatively worked on in a shareholder agreement or a buy-sell agreement.
Do all firms who work with you use your firm for dispute resolution?
Mandel: We counsel all of them to do it, and the majority do. We push hard to have a shareholder agreement in place from the very beginning. The ones that do can ride out disputes pretty well. The ones that don’t are the ones who become difficult problems.
How can partners stay focused in a dispute?
Howard: Focus on the good of the firm, rather than your own personal needs in any business dispute. Be flexible. Don’t go to the mat.
Mandel: Don’t enter a partners’ meeting with a loaded gun—either figuratively or literally.
Howard: Stay in the present. Often, partnerships are of long standing and can be like marriages. In the middle of a dispute, people can start talking about things that happened 10 to 15 years ago instead of focusing on what’s their problem today. Address the issues at hand.
How important is compromise?
Howard: In any dispute-resolution process, everybody’s going to feel a little pain. Nobody’s going to get everything they want.
Has the economy had an effect on disputes?
Mandel: Disputes are harder to resolve, especially if it’s a split-up or the departure of an owner. We preach having agreements with evaluation formulas that decide what somebody gets paid if they leave, but they rely on the goodwill of the parties to follow through. When the dollars are tighter, as they are now, the disputes get deeper.
Howard: I had one particularly tough dispute when the economy was good, but there was enough money in the firm to make it solvable. If it happened today, it wouldn’t have been solvable in a satisfactory way.
What about litigation?
Mandel: You don’t want to go to court. It’s expensive, and it’s time-consuming.
Howard: I find litigation to be very unsatisfying. It usually results in the firm just going away.
Beyond written agreements, how can partners prepare for disputes?
Mandel: Meet on a regular basis—monthly, bimonthly, quarterly—even if there isn’t a major issue to deal with. The closer you get to your partners, the better you’ll understand them.
Howard: It’s common sense, but we see it as a critical piece.
Any last thoughts?
Mandel: It’s inevitable. You’re going to have disputes.