Roderick I’Anson Banks of Partnership Counsel in the UK here talks to Lawyer Monthly about his in-depth experience and practice in partnership and LLP law, particularly as regards disputes and the challenges and benefits of ADR, which he says, is definitely preferable to litigation, in almost any scenario.
What is involved in your work pertaining to partnerships and the disputes therein?
One thing to mention is that I don’t deal just in disputes, although that comprises the majority of what I do.
My practice falls into two distinct areas: partnerships in the traditional sense, and LLPs (limited liability partnerships). The latter are confusingly not true partnerships, but more of a modern addition to the general partnership landscape. There are still a lot of traditional partnerships around, despite many converting to LLP status.
There is also a third, more specialised area still, limited partnerships, which are used in the investment field, hedge funds and so forth.
In disputes, I act either for an individual member of a partnership or LLP, or for the partnership or LLP itself when dealing with problems relating to an individual member. So I have to work on either side of the fence, and I know the various tricks that are likely to be played on both sides.
When I act for an individual partner in dispute with his/her firm, that will usually mean either that the firm is downsizing and the partner is being pushed out, or that the partner wishes to leave to go elsewhere, with his/her clients but does not want to serve the required notice period.
In cases where I represent the firm, it would in the same way involve managing partners out of the firm or trying to ensure stability when handling a partner trying to leave early with his/her clients; it’s often just two sides of the same coin.
Over the past 40 years or so I have also edited and re-written the benchmark book on partnership law, now titled ‘Lindley & Banks on Partnership’. It has been going since the 1800s, I have been editing it since the late 1970s, and in 1990 I carried out a substantial re-write when my name for the first time appeared in the title. I am currently working on a new edition, which comes out in 2017.
Who are the typical types of clients you deal with in this field? What challenges do they bring to your work?
In terms of routine partnership/LLP work, my main clients would be solicitors, accountants, and a selection of other professionals. On the other hand, with limited partnerships the clients will usually be corporate partners, hedge fund managers and similar; therefore a very different category of client there.
The real challenge often comes down to tactics and psychology between the parties; a lot of what I do when acting for individual partners who are feeling isolated involves listening, counselling, confidence building, script preparation. It is vital that the client enjoys the requisite degree of support in order to reduce stress levels, when it is one against the many.
What are the benefits of resorting to ADR methods in these cases?
Absolutely huge, in almost any dispute. If you are dealing with a dispute between an individual and his/her firm, or between two warring groups within a firm, it can be hugely damaging to rush off to court, particularly where there is no arbitration clause, which would allow parties to keep their dirty linen out of the public eye.
Mediation represents a very swift method of getting parties together in a way that enables an independent mediator to intercede between them, and, hopefully, avoid or minimise the worst grandstanding and temper tantrums that one sees when two parties try to deal with the issues between themselves.
Mediation is very valuable and relatively cheap, but it’s often difficult to get both sides to agree to pursue this course; that is the biggest challenge. Things have definitely improved over the last two to three years, as people are more aware of mediation and its benefits, and therefore more willing to mediate. There are, however, still solicitors and barristers who enter a mediation and treat it as if it were litigation, making speeches that are distinctly unhelpful. If you can get everyone into the right mindset, and equally important, get the right mediator, then you’re in business. Getting the wrong mediator, however, can be disastrous.
In what scenarios might litigation be the only resort for a partnership dispute?
Where it is (rarely) not capable of being mediated or where you’ve tried mediation and failed. I always prefer arbitration where litigation is required, as the parties have more control over the process and there is less formality.
One instance I am currently involved in concerns the disposal of valuable development land held by three members of a family in a farming partnership. The land was left to them by their father and they want to realise the land but can’t agree on how it should be done. Although there is still a hope it will settle, this is now heading to a hearing next year.
It is matter of a deep regret to me that there is still so much litigation in the partnership field. It suggests to me that the advisers have not made the efforts that they should do to get the parties together and settle. Nobody actually wins through litigation apart from the advisers.
As a thought leader in partnerships, what do you find are often the main motives behind disputes?
In the case of individual clients, motives will range from pure greed, a feeling that ‘the grass is greener somewhere else’, to desperation at the way the firm seems to be going. Particularly difficult is the partner who should have seen there was a problem coming but has put his head in the sand and ignored it.
If I am acting for the firm, the main aim is to maintain stability whilst getting rid of “dead wood” or underperforming partners, or managing the retirement of partners who want to leave in a controlled way.
Ultimately, however, the main driver behind partnership disputes is human nature. Human nature is a constant and partner behaviour follows distinct and identifiable patterns. Once I get into a dispute and I understand the characters involved, it is often easy to predict how they will react in any given circumstance. And that’s what I aim to do: to gear up the client for what is likely to happen next and enable them to second guess what might happen several steps down the line.
Can you talk LM through your experience as a CEDR accredited mediator? How does this help in your thought leadership in this field?
Though qualified, I tend only to act as an advisor to parties within mediations, and I personally think that if you go into a mediation with the right mindset and experience, you have a huge amount to contribute. It’s the client’s mediation, but you are there to provide calm counsel and advice, and ultimately, as and when a deal is done, I find that all parties usually turn to me and tell me to get on and draft the agreement, which has to be done there and then, often in the late evening or the middle of the night. I have to produce, very swiftly, a short but comprehensive agreement that the parties can understand and sign, which can prove very difficult when the parties (and their advisers) are getting tired and fraught towards the end of a mediation.
Do you have a mantra or motto you live by when it comes to helping your clients?
“Be Commercial, and look at the wider implications of a dispute.”
“Avoid litigation where it’s possible.”
“Take nothing for granted, and don’t assume the question the client is seeking is to have answered is the right one.”
“In dealings between a firm and a partner, trust no one.”
What motivates you most about your role?
The ability to innovate and, where possible, to steer the law in the direction I think it ought to go. Perhaps I am particularly well-placed to do this, given my authorship activities. People tend to regard me as the fount of all partnership knowledge.
Trying to do the impossible, and interacting with people, whether face to face or over the phone. Advice in this area is often intensely personal. You’re much better positioned to talk someone through a problem and steer them in the way they need to be steered sitting down with them rather than producing a dry written opinion.
What do you feel you couldn’t live without?
My family, action movies and crime fiction. The latter frees the brain to come up with novel solutions.