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22 August 2018

Divorce and the family business – could the collaborative approach help?

Divorce is rarely a positive experience but when there is a family business involved, the emotional and financial costs have a wider impact. It is generally best for everyone if the business continues in some way - it’s a valuable income generating asset after all. But how do you deal with the emotional pain of separation and keep the business running?

The collaborative method may help. With collaborative law each party has their own lawyer but the lawyers are specially trained and look for the best outcome for both parties. Instead of the traditional adversarial approach which can lead to the participants becoming polarised, adopting antagonistic positions which are then defended by their lawyers at a cost to the individuals and the business – collaborative law starts with a round table meeting. There is little if any correspondence – and no posturing!

Everything is geared to arranging meetings where matters can be constructively discussed. Each party has their own lawyer for advice, but those lawyers are preparing for meetings, with all the necessary financial information in place. It may be that the company accountant is present for part of a meeting to advice on the tax implications of a proposal. Everyone is encouraged to work towards the least worst option, a solution which preserves the business and gives each party a reasonable outcome. There are no winners in divorce but the collaborative approach tries to make sure there are no losers! You can save on legal costs by not going to court, you can preserve the business which will generally benefit both parties and you might even manage to maintain a reasonable working relationship. If you have children you are going to have to co parent those children for some years to come, so it is in everyone’s interest to avoid becoming enemies.

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