At Robinson & Robinson, we are turning our emphasis toward “business divorce” representations. Over the past 30+ years, the attorneys now at Robinson & Robinson have handled dozens of representations involving what are now called “business divorces.”
“Business Divorce” is the current jargon to describe a particular type of legal matter that clients have had — and lawyers have helped them resolve — for many years, probably since there have been lawyers.
As the phrase implies, a “business divorce” is likened to a spousal divorce. In a “business divorce,” the separating parties had once been joined to each other by their shared business, investment or familial interests but have since quarreled or disagreed, and now one, more or all want to exit the arrangement.
And also like a spousal divorce, the beginning of a “business divorce” may not start with any party demanding out of the relationship but may start with misunderstandings, miscommunications, and suspicions that, left unconfronted, worsen into accusations, threats and a breakdown of trust. The relationship is so broken that it cannot be repaired or so damaged that the parties do not possess the will to rejuvenate it.
In other cases, however, there is no anger or sense of betrayal, because the root of the “business divorce” lies in the fact that the parties no longer share the same interests and one or more of them see no reason to continue the arrangement. When that sense is universal among the parties, the relationship may be wound up relatively easily and amicably; but when one or more of them still want the enterprise to continue and refuse to allow the discontented to depart, a less friendly “business divorce” may soon follow.
As stated at the top of this page, we’ve handled dozens of “business divorce” representations.
Some have involved joint ventures among business organizations, where the relationship was formed purely based upon mutual financial interests and can be described as “nothing personal, just business.” These disunions may be conducted calmly and civilly but it is not surprising if they devolve into emotional contests — a businessman may normally view his business interest as distinct from his own person, but his self-control may nevertheless crack when his pride is injured. Handling these dissolutions requires skill in legal disciplines like business organizations, commercial law, contracts, negotiation, legal drafting, and tax, among others.
More have involved partnership, corporation, LLC and commercial breakups between individuals — including family members. Where an entity is closely held by individuals who built the business from scratch or by long-time friends who have associated with each other through a long-lived investment group; a standing commercial relationship is built on or maintained through a personal relationship of mutual trust; or a family partnership exists to protect and enhance the material welfare of the founders’ descendants, the end of the relationship is likely to require skill in handling nonlegal transactions, too.
In all cases, there is no substitute for experience.
We’ll talk more about typical components of business divorces in upcoming installments in this blog series.