Counseling Family Businesses
Family businesses face unique challenges. They tend to operate more informally and with less internal oversight than a non-family business, which can lead to legal problems. Further, if disagreements arise, the family dynamics can sometimes make it harder to find a resolution. Consulting highly skilled advisors can make a significant difference in the success of a family business. Our attorneys have extensive experience helping owners avoid potential liability and address conflicts effectively to protect the interests of the business and family.
Legal Check Up on Business Operations
Most family business owners form a corporation or limited liability company (LLC) to protect individual members from personal liability. A corporation or LLC has a separate legal existence from the individuals who own it and from other legal entities. As a result, owners are normally not personally liable for the corporation’s debt. However, this protection is not absolute. A common problem with family businesses is that they are lax about adhering to corporate formalities. If litigation arises, a court could eliminate individual liability protection (“pierce the corporate veil”), exposing shareholders to personal liability for corporate debts and liabilities.
Our firm can conduct a regular legal check-up on the business, its contracts and operations to help reduce legal risks. We also represent business owners in the event litigation arises.
Shareholder and Partner Disputes
As part of setting up a company, it is important to have counsel draft appropriate legal documents, including shareholder/partnership agreements, operating agreements, and by-laws. An attorney can also advise regarding instituting appropriate governance policies to ensure that the company operates in compliance with all laws and that there are safeguards in place to prevent owners or employees from taking actions that would hurt the business. However, even with such protections, family businesses are not immune to shareholder or partner disputes.
Our attorneys represent shareholders, companies, and managers in disputes involving enforcement of shareholders’ rights, actions against managers or the board, shareholders’ derivative actions; and corporate dissolution and receivership.
Breach of Fiduciary Duty
A fiduciary duty may be created by contract, operation of law, or the relationship of the parties to a transaction. In family businesses, corporate officers, directors, and some shareholders owe fiduciary duties to other shareholders and the corporation. Partners also owe a duty of loyalty and care to the partnership and the other partners. Breach of fiduciary duty claims are often complex. Our firm advises clients regarding such claims and helps resolve matters successfully.
Key employees should have written employment agreements, particularly if they are also owners of the business. However, often family businesses fail to memorialize the role and responsibilities of family members employed by the business. This can lead to conflicts regarding the duties, compensation, or performance of the employee as well as allegations of unfair treatment by the employee and/or other shareholders. We frequently litigate disputes involving employment agreements, including non-competition, non-solicitation, and confidentiality provisions.
Business Succession Planning
The purpose of a succession plan is to outline what will happen to an owner’s shares if an owner dies, becomes disabled, or elects to retire. Without a plan, heirs and/or co-owners could face significant financial and legal problems which can be avoided with some rudimentary advance planning. We assist owners with proactive planning and conflict resolution when succession plans result in legal problems.
Long Island Family Business Dispute Lawyers
If you need help preventing or resolving family business disputes, please contact our Long Island office. We can support and guide you through that process.
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