Dividing the Family Business Without Destroying It
(Kevin Fuller, former head of the Collaborative Law Section of the State Bar of Texas and the top collaborative lawyer in the state for 2012, is scheduled to give this speech at TEXPO, the conference of corporate financial professionals, later this month in Dallas.)
War stories always involve a war. A nasty divorce resolved by a courthouse showdown can destroy the family, the family’s wealth and the family’s business.
Sit down with any experienced family law trial lawyer and they’ll be able to tell you “war stories” of courtroom shootouts where a warring family ended up destroying the very wealth they were trying to divide. The worst of these divorce war stories end with a business or personal bankruptcy following a take no prisoners approach to a family’s divorce. When a divorce becomes a “war” there are many casualties.
Collaborative divorce – divide without destruction. There is a better way for families to divide their wealth in a divorce. That better way is called a collaborative law divorce. In a collaborative law divorce the parties stay out of the courthouse and focus on solving problems through business like negotiations versus assessing blame for problems in adversarial litigation.
Overview of the collaborative process. The collaborative process is a solution oriented settlement process that is both family friendly and business friendly. In the collaborative law process the parties and their lawyers sign a written agreement with five key components:
(1.) A commitment to settle if possible without going to court; (2.) A commitment to the full disclosure of financial and other information so that informed settlement decisions can be made; (3.) A commitment to focus on the future and solving problems instead of assessing blame and rehashing old marital arguments; (4.) A commitment to use jointly selected neutral experts when valuation, tax or accounting experts are needed or if specialized experts are needed to resolve issues concerning the children; and (5.) A commitment from the lawyers that they cannot and will not represent the parties in a courthouse battle if the process breaks down.
Collaborative law uses a “road map” to solve problems. When the parties work in the collaborative process they follow a problem solving method from the business world that provides a “road map.” The “road map” guides the parties through a logical step by step process that is designed to increase the chances of settlement and decrease the chances of emotional blow ups that often result in families tearing each other apart at the courthouse. In a nutshell this “road map” involves five basic steps:
(1.) An explanation of the ground rules for the process and the signing of a written collaborative law participation agreement; (2.) Determining what the parties’ shared and competing goals, interests and concerns are about the divorce, the business, the children and the division of property; (3.) Gathering, evaluating and sharing the necessary financial documentation and other information necessary to make informed choices about settlement; (4.) Brainstorming possible options and solutions to the parties’ disputes concerning their property or children; and (5.) Evaluating the available options and solutions and selecting the options and solutions that meet as many of the parties’ shared and competing goals as possible under the circumstances.
The collaborative process uses a “team” approach to solve problems. In addition to a business like step-by-step approach to dispute resolution, the collaborative process also often takes a “team” approach to solving problems. In many collaborative cases in addition to the parties and their two attorneys, the parties will jointly employ a neutral mental health professional and a neutral financial professional to help the parties in a more efficient manner get through the emotional and financial difficulties that confront almost all divorcing couples.
Under the team approach a neutral mental health professional serves as a “communications facilitator” and a neutral financial professional serves as a neutral financial expert for the case. The usual role of the neutral mental health professional is to manage the emotional issues of the case, keep the parties and lawyers communicating constructively and help the parties work through issues involving their children or other emotionally charged situations.
The usual role of the neutral financial expert is to gather, analyze and explain financial and tax information and prepare inventories, spreadsheets, budgets, income and expense projections and other similar financial tools. Additionally, financial professionals assist the parties in evaluating the short and long term financial effects of settlement options and help generate financial solutions and settlement options.
Collaborative neutrals help settle cases. Because the mental health and financial professionals used in the collaborative process are neutrals, they provide the negotiating process with a neutral voice throughout the process. Many times a solution can be seen or suggested by a neutral that cannot be seen by the parties who are engrossed in their own perspectives and positions. Additionally, sometimes a suggestion for resolving the dispute can be more easily heard by the parties when it comes from a neutral voice rather than one of the parties or their lawyers.
Having neutral professionals in the middle of the parties’ dispute as part of the collaborative process gives the conflict between the two sides in the negotiations somewhere to go – neutrals give the negotiating process a “middle”. Involving neutral professionals throughout the process is somewhat like having a mediator involved throughout the settlement process instead of just at the end of the process when emotions are frazzled and financial resources are dwindling.
Benefits of the collaborative process. There can be many benefits to working through a difficult divorce in the collaborative process. Benefits of the collaborative process include:
• Dividing the wealth of the family in a way that doesn’t destroy the source of that wealth or the family members in the process.
• Providing the parties and their business with a more private and confidential atmosphere than the traditional litigation process.
• Helping the parties reach financial solutions that are thoughtfully custom crafted to meet the needs of the family’s business interests as well as the parties interests versus a “one-size fits all” approach.
• Legal fees and professional expenses are more efficiently used, fees are spent solely on settlement efforts and not on procedural, evidentiary and other legal technicalities required in the litigation process – the process is far less expensive than contested litigation.
• Settlement conferences and meetings are scheduled when convenient for the parties instead of being centered around the lawyers schedule and the court’s busy docket.
• The collaborative process is less disruptive to the business person and their staff, clients and investors.
• The process can take weeks or months to accomplish a resolution versus years in the litigation process.
• The process can help parents carefully craft parenting plans to meet the unique needs of the children and their parents instead of relying on “cookie cutter” standard schedules and orders.
• The parties are much less likely to cause irreparable damage to family and business relationships than in contested litigation.
Get More Information about Collaborative Law. With a collaborative law divorce the parties have a chance to find ways to expand the pie they are trying to divide instead of destroying it. What a concept – a divorce with the possibility of making things better instead of worse. If you want to know more about collaborative law visit The Collaborative Law Institute of Texas at www.collablawtexas.org.