Trust Law Course 11 — Lesson 3: The Talk – Family Owned Businesses

[Music] Now let's listen to Stuart and Keith discuss the options and their recommended approach to this difficult problem eivin's Keith Davidson this is Stuart Albertson and we just heard my opinion on what's going on here with Simon and Todd and this family business and the mess that they find themselves in and I think it is a pretty big mess that's gonna be difficult to unwind they'll be a resolution eventually but who knows what it'll be what are your thoughts Stuart what do you think so there's two thoughts I had as I was listening through you two you go through the options number one it really matters who the wife here Patty who she ends up hiring as a lawyer that's an important piece that we need to know so who's the lawyer what's their background do they know and have an understanding of this area at the law because if they hire somebody like us a law firm like us that actually practices it in this area and focuses on it we're gonna be pretty deadly when it comes to supporting her rights it sounds like from the facts that the business was started after the marriage yeah and I think that that's a very strong claim that this is going to be a asset that goes entirely to or at least a I would say to entirely to Pat if you if we were representing her the second piece of information that we need to know is how is the case gonna be rolled out by Simon and Todd and what Simon and Todd need to do is they need to hire a law firm in my opinion that will file what's required if they can't get an ago she ation with Patty I'm not worried about the no contest clause here because this looks like it's an intestate estate all the way around there was some joint tenancy assets but it's an intestate estate so I'm not worried about that I might file something quickly and immediately moved to doing written discovery showing how much time and effort Simon and talk put into the business and then do depositions including Patty's deposition to show that she doesn't know anything about this business that she understood and knew that this was a three-way partnership or at least she understood that her husband treated the kids as equal partners make her lie catch her in a lie once you force her to do those things then I think naturally that option number four of negotiating with patty that will come to life and you know I've talked to you about this in the past where I feel like both sides need a little bit of a bloody nose before a good settlement can happen and if paddy gets the right lawyer here I think the boys are gonna be in trouble but if they if they themselves were to prosecute this case properly they'll be able to work something out especially a petty can't run the business because the only way the business is valuable is if the two of them are running it and making it more valuable for her so you're talking about using the court actions to try and build up some sort of leverage to go into the negotiation with and so that's kind of the overall strategy is that right that's right and what really is the weak point do you think setting just the legal theories aside from for a moment what's really the weak point for paddy in a case like this well you have to make patty and her lawyers concerned about the idea that she may not get anything and you know sometimes the opposing lawyer in these cases is our best advocate because lawyers tend to draft letters to their clients that they would never share publicly with anyone else and those letters generally what they show the worst case scenario and so what we want to do is we want to reach out we want to continue to touch the lawyer with pleadings and discovery and depositions and whatever else we need to do in the case and I promise you it doesn't matter what deposition I've taken in my career you always get some good facts out of every deposition no matter how bad the facts of your case look like and so when you find those good facts you want to make sure you highlight those to the opposing attorney then like I said naturally the negotiation or a mediation will take place if that takes place chances are paddy secured something the boys secured something and the way I'm looking at this is I'd say to patty look we'll make the business profitable over the next 20 years let us pay you out over the next 20 years and we'll pay you from the proceeds or the earnings that we make from the business well that's a win-win for everybody it keeps the boys employed keep less them ultimately get the business 20 years down the road and it gives patty a big nice paycheck every single month or every quarter or whatever it is that they decide to pay her over that 20 years for the business interest what do you think of that yeah and that's something that I didn't really get into in my opinion but if you think about it when it comes to the negotiation when you can get highly creative with these negotiations right so okay you're gonna do what you have to do and or you're gonna apply the pressure but this case is going to take what 12 to 24 months to run through the court system it's gonna cost Patti a substantial amount of money to pay for her lawyer to go after her interest and Simon and Todd are gonna have to pay money to but that but the point is is that there's a financial cost there's a time cost there's an emotional cost that the parties are going through so at some point and there has to be a break where we negotiate and the reason why I think the negotiation is so interesting is that with a family business like this you can be very creative you can do payments over time versus lump sum you can base it on profitability you I mean anything you could think of you can pretty much put down and put into action through paper and there's protections you can build into so if they don't make the payment then this happens and so you can get highly creative with these situations but I don't really see any scenario in this case where patty walks away with Xero and Simon and Todd get everything without patty just choosing to do that which isn't typically how it works but do you see any a scenario with patty walks away with Xero if I had to choose an answer your question no if I had to choose the client that I'd want to represent in this transaction to be patty but the more challenging and the more exciting representation would be Simon and Todd because if you could be creative as a lawyer and finding that settlement that allows them to continue on and to ultimately own the business down the road that's very satisfying as well and that's an odd thing that patty has the stronger rights given the fact that Simon and Todd were the one that worked in the business they helped build it up they made the sacrifices I mean maybe patty did too in our factual scenario she didn't that's not always the case but let's say patty had nothing to do with the business doesn't know anything about it assignment Todd you know they worked late hours you know 80 hour weeks hundred hour weeks building it up and yet they're the ones with the worst claim that's right and and this all goes back to Walter Walter probably a good guy probably didn't think he was gonna die I don't think most people think they're gonna die you've got to do the planning especially when there's a valuable asset like this yeah and then then at least we'd be clear on what Walter intended because we'd have donkeyness to look at but he didn't do that and so the lawyers all got better off on transaction and hopefully Simon Todd and Pat and Patty found a way to split this up to where they could all survive [Music] [Applause] [Music]