Any lawyer who has handled family business disputes can say that these cases tend to get ugly, protracted and destructive. This is normally caused by the family members in power not wanting to relinquish that power over time or at all. However, a good litigator will be able to handle these disputes as long as they are well prepared and willing to go to the extra mile.
But why are family business disputes so important? For most a family business would mean a small mom and pop store that has been in the family for many years. However, it should be noted that several large businesses have been family run and owned for many years. Many businesses even employ hundreds of thousands of employees.
So what are the most common sources of conflict when it comes down to family business? Many times it is role management. In the family the role people play are usually clear cut–the mother has her role while the father is has his own. While in the business world the roles are most often reversed with the mother being the head of the business and the father taking a lesser role. Many times the father being the man does not take well to this over time.
Another source of conflict usually stems from succession, meaning the previous head of the company dies, or retires and did not leave a clear successor to the company. When the next generation is taking over, internal is sure to follow as everyone who wants to be in charge will take steps to become the head of the company.
So how do families avoid such conflict? Normally clear contracts and terms of employment should be made after the company begins operation. No matter if the company is as small as a single restaurant or a chain of stores, family roles must be clearly stated to avoid conflicts.
However, when it comes down to succession the lines usually become blurred as feelings must be considered. There are cases of succession where the previous generation does not want to name the direct successor because they don’t want to seem to favor one child over the other. In many cases one member of the succeeding generation begins to distance themselves from the others.
Family business disputes never end well as someone usually ends up hurt. For help your family business dispute the offices of Edward Lai Law are willing to help.
For a consultation feel free to contact Edward Lai Law at 510-397-8287.