Escalation of Conflict Between Business Partners – a real Scenario

How does a dispute between partners escalate? There are many possibilities of conflict escalation. Today, I want to present one potential scenario. Why? Because I am a lawyer and mediator advising business partners in high-conflict situations. This illustrates the consequences of acting in anger and persistence. I do not want to scare anyone. I want to help you avoid what I have often seen. Why does this matter to me? I believe we must care for Polish business. It is the engine of our economy and our prosperity. In this article, you will learn how the “point of no return” is crossed. You will also learn how to save the company when emotions take over.

Conflict escalation. What are the causes of disputes between partners?

A conflict can escalate regardless of its original cause. Money is rarely the main reason for disputes and conflict escalation. More often, it is about respect or agency. It is about realizing a vision or different risk tolerance. Sometimes it concerns nepotism or financing methods, such as debt aversion. Often, there is no single cause. Partners notice the dispute only when many interests collide.

In my work as a lawyer and mediator, I have seen how conflicts between business partners escalate from minor disagreements into destructive disputes that threaten the entire company. This article is based on those real-life observations.

I discussed the causes of partner disputes in this podcast episode: https://open.spotify.com/episode/4p20ALoBzNcmzQ0W2otf0e?si=TlCfbdvUQ0mCwCCmEtai2A

How does a conflict begin?

Initial differences are often viewed through the lens of the fundamental attribution error. I wrote more about it here: https://jakubieciwspolnicy.pl/podstawowy-blad-atrybucji-w-pracy-adwokata/ and here https://jakubieciwspolnicy.pl/podstawowy-blad-atrybucji-w-sporach-rodzinnych/

In short, people tend to blame negative internal traits for someone’s behavior. We call others “fools” or “greedy” instead of looking at external causes. This is simply easier. It also makes us feel like the “good” and “wise” partner.

This attitude has a dangerous effect. A substantive dispute turns into a conflict of values. One must not yield to “evil” or “greed.” This would be a betrayal of ideals. We trap ourselves in a corner. We lose the flexibility needed for an agreement. The escalation then becomes faster and more violent. Both partners often sit on a powder keg for years.

This is the Moore’s Circle of Conflict. I asked ChatGPT to create this graphic.

How does a dispute explode?

A “proxy” dispute may erupt first. One partner may contest the work of the other partner’s wife. They might complain about her salary or performance to other employees. This creates a heavy atmosphere immediately.

Such news spreads through the company like wildfire. Eventually, the partner and his wife find out. How will they react? She might resign. The partner might defend her publicly or remain silent. It is unlikely they will seek a mediator or business psychologist yet. They usually try to handle it alone.

The partner considers his move…

The partner will think about how to retaliate. Perhaps he will block dividend payments. He might ask ChatGPT for advice on this. The AI might suggest seeing a lawyer.

The other partner is building a house and needs the money. Blocking the funds is framed as “caring for the firm.” In reality, the house construction stopped. The money is needed for a child’s cancer treatment. The partners have not spoken for a long time.

This problem was not the AI tool. The partner only sought confirmation of his own idea. He did not analyze the consequences or alternatives.

Manifestation and escalation of conflict

Eventually, an explosion occurs. Partners shout and trade heavy accusations. It is not a constructive talk. They bring up past incompetence, malice, or dishonesty.

Each partner seeks advice from lawyers. These lawyers often suggest escalatory solutions. They believe in their clients’ rightness. They want what is best for them.

This leads to blocking payments and firing relatives. They dispute the use of trademarks or company cars. The first case goes to court regarding the dividend. A hearing is set for 12 months later.

No one wants to wait that long. A court verdict will not solve the core issue. It will only trigger a desire for revenge. Partners then start pulling employees to their side. They probe key clients about a potential split. Most energy is spent on harming the other side.

The role of advisors in conflict

I compare misused AI models to lawyers who follow client goals without reflection. It is like a patient demanding a heart transplant without an exam. A good advisor should examine the situation first.

Many people seek legal advice only to confirm their assumptions. They do not want an analysis of alternative paths.

What are the effects of conflict escalation?

Escalation brings destruction. Decision paralysis consumes the company. Soon, the first employees leave. They do not give a reason. Partners do not realize that loyalty conflicts destroy morale.

Efficiency and quality drop. Key clients leave for the competition. The bank cancels loans due to lost liquidity. Within a year, the company faces bankruptcy. It collapses like a house of cards. Additionally, tax authorities begin an audit of management contracts.

Could the escalation have been avoided?

Disputes are natural in every relationship. However, you can prevent a dispute from becoming a destructive conflict. This happens when we stop blaming the person and look at the circumstances.

This scenario lacked a dialogue and an understanding of needs. Partners should seek a mediator early. In this example, they should have acted right after the first big fight. Instead, they went to lawyers and demanded war.

We cannot blame the lawyers entirely. Many see professionalism as merely following client orders. I have a different approach. I discuss whether the chosen direction is truly good. This is the moment to save millions of zlotys and years of work.

Recommended Reading

For those interested in conflict structure, I recommend “The Strategy of Conflict” by Thomas Schelling. For dispute resolution, read “The Mediation Process” by Christopher Moore. These books show how hard it is to stop escalation.

If your business relationships are failing, contact us. We help clients avoid the scenarios described above. Many companies end this way. We treat court cases as a last resort. We prioritize dialogue, negotiation, and mediation.

Contact us: 📩 kancelaria@jakubieciwspolnicy.pl 📞 +48 536 270 935