For his latest article, Grid Law founder David Walker explains how owners of small companies can ensure business disputes are handled effectively and with professionalism, avoiding any personal attacks along the way.
Recently, I was involved in a very acrimonious dispute in the High Court. Although it was a business dispute, it had become very personal. Neither side was backing down so we all ended up in front of a judge.
As I sat there, waiting for the trial to start, I thought of a quote from Michael Corleone in the Godfather, one of my favourite films:
“It’s not personal, Sonny. It’s strictly business.”
I thought about how, if the two sides of this dispute had kept things a little more businesslike, we would have probably managed to negotiate a settlement that everyone was happy with.
But we didn’t, because all of the decisions were emotional and unfortunately this is a situation I see all too often.
For many of us, there isn’t a clear divide between our personal lives and our business lives. We put our hearts and souls into providing the best products and services so when, for example, someone doesn’t pay on time it is personal. It hurts and emotions can run high.
So, how do we stop business disputes becoming too personal?
How can we make sure we’re still making rational business decisions and not letting our emotions control our actions?
We have to remember that we all have natural defence systems that protect us in dangerous situations. If someone is attacking you (and that’s what paying late can feel like) adrenaline, the “fight or flight” hormone, surges through your body.
In stressful situations, our ancient ancestors would have either run for their lives or fought for their survival. We have the same natural instincts when faced with a legal dispute, which is why negotiations can become confrontational.
You must therefore learn to manage this stress and channel it to get the best result.
However, we don’t want to (and probably couldn’t) eliminate it altogether because a little bit of stress sharpens our senses and focus, helping us to perform better. It’s only when we have too much stress or it’s not properly managed, that it stops us from thinking logically and we make rash decisions.
So, using mediation to resolve a dispute over an unpaid invoice as an example, here are my four top tips to help you manage your stress levels during any discussions over business disputes with your client.
(1) Remember what Michael Corleone said: “this isn’t personal, it’s strictly business”
As much as this is going to feel like a personal attack on you, it’s not. You’re not really in any physical danger so you have to keep things in perspective.
Remember that the outcome you’re looking for is to be paid as much as possible as soon as possible. You’re not looking for revenge, to even the score or to right a wrong.
With this in mind, you have a clear goal to focus on. You can then make a plan to achieve this goal and this puts you in control. When you’re in control, you automatically feel calmer and your stress levels go down accordingly.
(2) Remember your client will also be feeling stressed, and probably even more stressed than you if he feels like he’s under attack
You don’t want your client making emotional decisions focused on protecting themselves. You want them to make a logical decision to pay you! For them to do this, they need to be relatively calm and not feeling defensive.
This will go against all of your natural instincts. You will want to be on the attack, but don’t be.
Demonstrate control and remember, you’re not doing this to make them feel better. You’re doing this for your own benefit because if your client is less stressed, you’re more likely to be paid the money you’re owed.
(3) Set an agreed agenda for the mediation and then stick to it
The important point here is that the agenda is agreed. When you’re arranging the mediation, set an agenda outlining the points that both you and your client want to discuss. To do this, your client must be invited to contribute to this.
This will give you both the opportunity to properly prepare for the mediation and not feel like you’re being ambushed. Remember, mediation isn’t a trial where someone wins and the other loses. You’re trying to achieve a settlement that you’re both happy with so you can avoid going to trial.
Having an agreed agenda will dramatically reduce the stress levels for both of you, and if you’re both thinking logically, a settlement automatically becomes more likely.
(4) Think carefully about the language you are using
During negotiations, your language should be assertive, not aggressive.
When you’re being assertive you explain your point of view with logic, reasoning and with as little emotion as possible. You make the business case for why you should be paid.
When you’re being aggressive, there’s less explanation and the explanations you give are not necessarily fully thought through. Your emotions rule the discussion, leading to two possible outcomes, neither of which are good for you.
First, your client will do the same. They’ll fight back to protect themselves. The negotiations then become personal and as a matter of principle, neither one of you will want to back down.
Second, if you’re being aggressive and making emotionally charged arguments, your client could take control of the situation. If they control their stress levels and respond assertively, they will use logic and reasoning to pick holes in your emotional arguments. You will then be on the back foot and find it much harder to persuade them why they should be paying your outstanding invoice.
The best scenario is for you both to use logic and reasoning to reach an agreed settlement. The mediator should help with this and step in if the discussions become too heated, but by then, it can be too late.
Despite your best efforts to keep the situation calm, your client may remain aggressive. This is normally because they know they’re in the wrong and there’s no logical reason why they haven’t paid you.
They will put up the strongest fight they can and it’s unlikely that you’ll be able to reach a settlement with them. If you find yourself in this situation, don’t worry. You can take comfort from the fact that if you do take them to court, you’re probably going to be in a very strong position to win.
For more information about resolving business disputes, see my previous article How to settle a dispute before taking a case to court.
If you have any questions about recovering unpaid invoices, or resolving disputes generally, please feel free to email me at email@example.com and I’ll happily answer them for you.
Read more advice from David Walker:
- A guide to resolving family business disputes
- An essential checklist for setting up a family business
- Advertising law: Our legal expert answers your questions
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