Mediation Case Study: Tricky Business

EU Mediation's case studies aim to explore the types of disputes that mediation can work well for. They are all based on real-life cases that our mediators have carried out.

This entry looks at the conflict and subsequent mediation for tech company co-owners, Lukas and Nadiya*.

* Names have been changed for confidentiality and privacy purposes.


The Backstory

Lukas’ and Nadiya’s Austria-based business had been thriving for several years when Nadiya decided she needed to go it alone. She wanted to dissolve her partnership with Lukas and set up a new venture with some family members back in Romania. They had been running their specialist tech company since university, where they had met while doing a Masters in computer science.

When it came to closing the partnership down, they realised that, in the earlier excitement of setting up their new venture, there were some important details that they had failed to attend to, which became contentious now that they were going their separate ways. They agreed to take advice from a solicitor in Lukas’ native Poland, who asked them a lot of questions that they did not have the answers to.

For Nadiya, she wanted to be in a position where she could set up a new company afresh, to feel that she had received her just reward for everything she had put into the venture, and to know that she was getting a clean break. Privately, she was critical of Lukas for having what she called a overly ‘laid back’ attitude to business matters: although technically brilliant, she felt that he had never paid enough attention to record-keeping, documentation, and keeping an eye on the profitability of everything they produced.

Lukas wanted to carry on running the company after Nadiya’s departure, using the same name and operating from his native Poland. He wanted a sense of a fair distribution of the company’s assets and an assurance that she would not come back years after the split and expect an ongoing payment. He also wanted a sense of clean break, so that he could take the company in whatever direction he would later choose.

EU Mediation’s mediator did the preparatory work online with Lukas and Nadiya: defining some terms for the mediation, receiving position statements from both parties, and getting an initial understanding of what both wanted to achieve. It was suggested that they should both have their own legal advice, and each spoke to solicitors in preparation for their discussions.

Given the high number of contentious issues involved, it was decided the mediator would travel to Vienna and stay over for a couple of nights, allowing two full days for mediation.


The Mediation

In commercial matters, the process normally begins with a joint round table session, and then the two parties break off into separate rooms, with the mediator shuttling between them. However, mediation is a very flexible process, and in this case there were a number of interpersonal elements that went beyond purely business discussions. As such, the parties remained in a longer joint round table session, allowing a much more personal exchange to take place. This was punctuated by each party speaking by phone to their legal advisers, ensuring that when more financial and contractual topics came up, that each party understood their legal position and their limits of negotiation.

At the end of the first day, a lot had been agreed in principle, and Lukas and Nadiya had covered a lot of ground in relation to both personal and purely business matters. There remained some issues around the ongoing use of the company name, the proceeds from Lukas selling off some of the company’s assets and intellectual property, and ultimately the size of the pay-out that Nadiya would receive.

Lukas and Nadiya agreed to each have their legal advisers available online on day two, as they began to define some of the more specific terms of their developing agreement. It was evident that they both benefitted from clearing the air around their whole history - personal and professional - and in getting a better understanding of one another’s motives. They also shared a common goal to draw a line under the current business arrangement and to each move on to their new setups.


The Conclusion

By the end of day two, Nadiya and Lukas had agreed that Lukas could keep the client list and the company name if he slightly modified it, that Nadiya’s agreed pay-out would reflect a share of the current assets and the projected future earnings over the next five years, and that their agreement would involve a completely clean break with no comeback from either side. The parties left with a signed Memorandum of Agreement, which their lawyers were then to pick up to finalise matters to the satisfaction of the courts.

Based on both of their lawyers’ initial estimates, it was thought that mediation had saved Lukas and Nadiya a combined total of around €650,000 in fees and, instead of the projected 3-4 years of litigation, two days of mediation meant that everything was finalised within an overall period of around 4 months.


Get in touch

If you have a similar dispute ongoing, or if you would like some advice on whether mediation would be suitable, please get in touch with our team on hello@eumediation.net. Alternatively, you can submit a contact form here.