Business partnerships, particularly among family or close friends, can become exceptionally fraught when things go wrong. When partners in a family business disagree on the direction of the company, when a major downturn or setback threatens their livelihood, or when some of the partners decide it’s time to leave or wind down the business, disputes that might be manageable problems in any other partnership can quickly become acrimonious and destroy much of the economic value the partners have worked for years to create.
Distinctive Features of Family (or close Friends) Run Businesses
Family businesses or companies run by close friends might not have adhered strictly to all the corporate formalities. Agreements or decisions that would have been put in writing in business relationships with non-family might have instead only been discussed verbally, with a hug or a handshake to mark the agreement. Why does this matter? Because when an agreement is in writing, even when the parties later disagree as to what the contract means, at least there is clarity on what the parties are arguing about. If critical agreements or decisions weren’t put in writing, disputes are at best, a memory test, and at worst, devolve into arguments about who is being honest and who isn’t.
Additionally, in a family business it is not uncommon for some members of the business to trust others to handle things like bookkeeping and taxes, or compliance with regulatory or legal requirements. Family or close friends (as opposed to business partners who manage things at arm’s length) often rely on one another without taking independent steps to verify that the accounting or compliance tasks are being handled carefully and correctly. If that trust turned out to have been misplaced, however, the impacts on both the family business, and the personal relationships among the partners can be devastating.
A bad business breakup between close family and friends can also draw into the dispute countless external issues. Every conflict siblings ever had with each other, every unresolved fight between ex-spouses, and every annoying quality of a one-time friend becomes another layer in an unfolding battle. These conflicts, which can be just as deep and affecting as the business dispute (if not more so), only make it harder to resolve the partnership woes.
The Importance of Business-Savvy Counsel That Can Manage Interpersonal Dynamics
Inexperienced or unsophisticated counsel will only make these matters worse. They might allow personality conflicts or long-simmering disputes to distract from the focus on the business dispute, making achieving resolution even harder. They may also lack the expertise necessary to analyze the decisions and deals that led to trouble in the partnership, preventing them from being able to advise their client properly on the strengths of the case or any potential areas of concern.
If not expertly managed, the failure of the partnership will destroy a great deal of value for all involved. Lawyers can only represent their clients well in these circumstances when they bring to the table an understanding of the complex business relationship and the dynamics driving the dispute, and an ability to analyze the issue objectively to identify the strengths, weaknesses, and unidentified hazards in your dispute.
We understand that the dissolution of family business partnerships can be among the toughest cases in business litigation. Zealously advocating for your client in these circumstances requires first knowing what the client’s definition of success is. Each business dissolution is unique and what constitutes a satisfactory outcome in such stressful circumstances can be different for each client.
We have handled major family business disputes, including numerous partnership dissolutions, achieving outstanding results for our clients. Our clients value our expertise, experience, and judgment. We bring a deft touch to this complicated area of law, knowing when aggressive litigation is called for and when a different approach will lead our client to the best outcome. No matter how difficult your business partnership dispute, we stand ready to help you achieve a successful resolution.