Law Times

Page 8 April 9, 2018 • lAw Times www.lawtimesnews.com How ADR can help with family businesses BY DALE SMITH For Law Times A s baby boomers start retiring, disputes are arising within family businesses as to who will take over once the parents retire. Lawyers and alternative dispute resolution profession- als say that mediation can help reduce conf lict and ultimately salvage relationships in these situations. "There is so much wealth be- ing passed on between the baby boomers and their descendants; this is a very common problem," says Paul Iacono, president of YorkStreet Dispute Resolution Group Inc. in Toronto, a former litigator who has been practising ADR since the 1990s. Iacono says a common situ- ation is a business started by brothers or sisters and, as they all reach retirement age, their next generation isn't getting along with one another. "When the adults are there, supervising the children, every- thing is fine," says Iacono. "With the next generation, one group thinks they're smarter than the other group and wants to go in different directions. In order to keep peace in the fam- ily, the best solution is to put a value on the business and break it up into its component parts. In order to do that, you need good facilitators." Iacono says these facilitators need to have the training to re- duce conf lict and let it be known that, if they go into litigation, the parties can destroy the business as well as their family relation- ship. As well, if they do reach liti- gation, they tend to be spending money that belongs to the estate or the business. "I have been retained several times by families to assist them in conducting meetings and ne- gotiations among family mem- bers," says Gary Caplan, partner with Mason Caplan Roti LLP in Toronto, who practises both liti- gation and ADR. Caplan says he's been called in to assist where founding members of a family business are about to retire and there are issues around succession. "The kids are working in the business and, not infrequently, the children have differing vi- sions of where the business should go," says Caplan. He says that, sometimes, there are personality differences among the children and, some- times, the disputes have nothing to do with business planning but rather the interpersonal rela- tionships among the children. Caplan says that further diffi- culty arises for family businesses on tax planning, insurance and corporate advice on how to di- vide assets up. It can also arise if and when one of the children wants to be compensated for taking over the family business, which can cause a complete corporate re- structuring, he says, such as who gets preference stock or com- mon shares and who gets to be on the board of directors. Caplan says an ADR profes- sional can help familes from a "holistic" point of view and alert them to some of the issues in- volved. This is necessary because the corporate lawyers for the family business would find themselves in a conf lict position if it looked like they were choosing one child over another. "Unfortunately, what lawyers fail to realize is that rather than head off a corporate response, they're better off to start explor- ing ADR techniques as soon as possible," says Caplan. That can mean becoming a communications facilitator, act- ing as a mediator and, if there are justiciable disputes, acting as an arbitrator. David Lees, partner with Mills & Mills LLP in Toronto, who practises largely in litiga- tion, says that by using an ADR process, it keeps the matter pri- vate and allows more choice and creativity than a court process would allow. "You can come up with these unique things, whether it's a vot- ing arrangement or a mortgage on the company where [one par- ty] gets paid out over time," Lees says of the kinds of solutions ADR could provide. Lees says mediation can be helpful because it can put a pro- cess in place once family mem- bers identify what they want. He also says this applies to trusts, when the succeeding children can plan ahead for gen- erations. Caplan says that, for a suc- cessful family business media- tion, the first stage is getting all of the information about the company followed by getting the outside professionals necessary, such as tax advisors and succes- sion planning, and getting them involved in the conversation. At that point, the dispute res- olution professional can come in to help resolve the situation. "There's no cookie-cutter ap- proach to any of this," says Ca- plan. Lees says that when it comes to salvaging family relation- ships in a tough succession situ- ation, the creativity afforded to ADR processes and solutions can help fashion a tool or dis- closure that will suit the per- sonalities at play. Lees says that by starting with mediation instead of litigation, families can prevent polarizing of certain family members at the start of what could be a conten- tious process. "As well, the opportunity for the parties to have the catharsis of being in a room together can be something that wouldn't hap- pen in court," he says. "Because you are having to take these steps at mediation, with an end of trying to resolve it, it's not as polarizing as a first step where you have children who aren't getting along and don't trust each other, who im- mediately go to a lawyer who then stakes out a very clear posi- tion of all of someone's demands, then maybe bargain underneath that." LT David Lees says that by using an ADR process, it keeps a matter private and allows more creativity than a court process would allow. FOCUS FOCUS ON Alternative Dispute Resolution JUDICIAL VACANCY ONTARIO COURT OF JUSTICE ST. CATHARINES The Judicial Appointments Advisory Committee advises the Attorney General of Ontario on the appointment of Judges to the Ontario Court of Justice, and invites applications for a judicial position in St. Catharines. This appointment involves presiding over criminal law matters and also involves travel within the regional boundaries as assigned by the Regional Senior Justice and/or the Chief Justice. The minimum requirement to apply to be a Judge in the Ontario Court of Justice is ten years completed membership as a barrister and solicitor at the Bar of one of the Provinces or Territories of Canada. All candidates must apply either by submitting 14 copies of the current (July 2017) completed Judicial Candidate Information Form in the first instance or by a short letter (14 copies) if the form has been submitted within the previous 12 months. Should you wish to change any information in your application, you must send in 14 copies of a fully revised Judicial Candidate Information Form. If you wish to apply and need a current Judicial Candidate Information Form, or if you would like further information, please contact: Judicial Appointments Advisory Committee Tel: (416) 326-4060 Fax: (416) 212-7316 Website: www.ontariocourts.ca/ocj/jaac/ All applications, either sent by courier, mail or hand delivery, must be sent to: Judicial Appointments Advisory Committee c/o Ministry of Government Services Mail Delivery 77 Wellesley Street West, Room M2B-88 Macdonald Block, Queen's Park Toronto, Ontario, M7A 1N3 Applications must be on the current prescribed form and must be TYPEWRITTEN or COMPUTER GENERATED and RECEIVED BY 4:30 p.m. on Friday, April 27, 2018. CANDIDATES ARE REQUIRED TO PROVIDE 14 COPIES OF THEIR APPLICATION FORM OR LETTER. A Fax copy will be accepted only if 14 copies of the application or letter are sent concurrently by overnight courier. Applications received after this date WILL NOT be considered. The Judiciary of the Ontario Court of Justice should reasonably reflect the diversity of the population it serves. Applications from members of equality-seeking groups are encouraged. Untitled-5 1 2018-04-03 1:36 PM

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