Wednesday, August 17, 2016
Family Business Planning: A New Approach at LMWF
By Scott E. Friedman, Andrea H. HusVar, and Eliza P. Friedman
In spite of their importance – to our economy , to our workforce, to our culture, and to families – the legal profession has given woefully insufficient attention to the unique planning needs of family owned businesses. For example, in our informal survey, we were unable to identify any law school whose curriculum includes a course devoted to family business. Another informal survey of resources made available to attorneys through bar associations, including publications and continuing legal education, reveals a principal emphasis on estate planning , tax planning , insurance planning, and buy-sell agreements. While we acknowledge the importance of each of these subjects, their primary focus is on money – how to maximize its value for family members by minimizing federal and state taxes – not on people: strategies for helping individuals, teams, and organizations learn to better able to enjoy life, succeed in business, work together effectively – to flourish. The emphasis on “financial planning” without a comparable attention to “people planning” has come at a great cost.
While these costs are impossible to measure accurately due to the private and confidential nature of many family business affairs, authorities continue to cite statistics suggesting that approximately 70% of family businesses fail to successfully complete a transition to the second generation, and a staggering 90% of family businesses fail to complete a transition to ownership by the third generation. The commonality of family business struggles is often expressed through the well-known proverb, “shirtsleeves to shirtsleeves in three generations,” – a proverb that seems to have a counterpart in every country with family businesses. While the accounts of what compromises these statistics will only be known to the family members and their professional advisors who serve under obligations of confidentiality, there are nevertheless seemingly endless published accounts of prominent families, including Gucci, Guinness, and Gallo, whose infighting has become known through the public litigation process.
Beyond what these inherently imprecise statistics and anecdotal published reports reveal is the tragic human toll taken as a result of family business dysfunction: parents, children and siblings who no longer talk to each other, sometimes as a result of intra-family litigation. Indeed, we suspect that any attorney who works with family businesses on a regular basis has his or her own personal experience involving family business dysfunction and crisis.
LMWF has developed new strategies that are designed to integrate insights from multiple discliplines, including law, business, and psychology, particularly positive psychololgy. To learn more, please visit www.lippes.com or http://next-gen-advisors.com/ or contact Scott Friedman (SFriedman@Lippes.com ), Amy Habib Rittling (AHabibRittling@Lippes.com ) or Andrea HusVar (AHusVar@Lippes.com ) or call them at 716-853-5100.
Disclaimer: The information in this post is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from our firm or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.