Business Transformation

What Happens to a Business in a Family Law Dispute?

Sometimes business and relationships do not work well, and if this happens in family businesses, the experience can be particularly stressful. Some of the most common reasons behind disputes in family businesses are the behavioural challenges of a particular family member and ideological differences between the founders.

Whatever may be the reason, family business disputes rank amongst the most arduous mental experiences, especially when there are no legal agreements in place.

Can you make it less troublesome and how can family lawyers help? Absolutely! Read on to find more.

Why do Family Disputes Arise?

One of the reasons lies in the imbalance of power and responsibility.

Business conflicts are common, but when stakeholders are related, they tend to escalate far more quickly.

  • Oppression of minority shareholders by a family member that enjoys more power leading to dissatisfaction
  • Breach of business ethics or duty by the director that results in business losses
  • Disagreement over business decisions between stakeholders, which causes a family deadlock

How to Approach a Dispute?

You might feel like ignoring the dispute for a while, hoping it would go away on its own – this is a big mistake. If not tackled timely, this would lead to a two-fold problem – widening rift between the family members and revenue losses for the business. Use the following step-by-step method to glide through the process.

Step 1: Recognise the issue

Read the contracts, e-mails, or any other communication that forms the basis of an agreement between all involved parties to better assess the situation. Note down your options and important points

  • Look for any relevant details that might nip it in the bud – there is nothing like an easy resolution. If there are no documents or communication on the matter, proceed to the next step directly.
  • Oral contracts are legally acceptable, given that there are other pieces of evidence to support them.

Step 2: Communicate 

Reaching out to those involved can ease the tensions around the issue and may even mitigate the differences, thus eliminating the need to go to court.

  • A large chunk of disputes arises from miscommunication and hence, can be solved with an open mind and willingness to negotiate.
  • Whether you choose to communicate face to face, telephonically or via e-mails, keep a record of the conversation in form of meeting notes that would come in handy in case the issue stays unresolved.

Step 3: Seek Help

If personal or group communication does not seem to solve the dispute, there are other methods of mitigation that serve as final resorts.

  • As a last resort, you could choose to go to court with the dispute. Use your meeting notes, and communications as evidence to support your cause
  • Family lawyers are skilled and professional service providers who can help you get a resolution in the least time-consuming way possible.

If not handled carefully, family business disputes can take their toll on you. Family lawyers can certainly help ease the pain, but choosing the right one is the key difference between success and failure. Make sure to look for indicators like experience, number of successful cases and level of expertise before settling for one.

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Anna Papadopoulos
Vice President & Executive Editor. Anna Papadopoulos is the Vice President and Executive Editor of the CEOWORLD magazine. In that role she resumes responsibility for the CEOWORLD magazine newsroom, setting daily news priorities, and directing all of CEOWORLD magazine's news-gathering teams. Previously, Anna was the senior supervising editor of CEOWORLD magazine's International Desk. Follow her on Twitter, Facebook, Instagram, or connect on LinkedIn. Email her at AP@ceoworld.biz