Family Owned Business Dispute Resolution

When someone decides to start a new company, it is natural that they should want people they already know and trust to be a part of the new company. It is for this reason that family businesses—a business controlled by two or more members of a single family—are ubiquitous. Family businesses are tremendously important for the U.S. economy. They represent the majority of all businesses and employ about half the nation’s workforce. While working with family can have a number of benefits, the family dynamic can pose unique challenges when business disputes inevitably arise.

Business disputes are not unique to family businesses, however. Disputes are a normal part of any business relationship—or any relationship personal or professional for that matter. It is the fact that the business system and the family system naturally are deeply interrelated that make family-owned business disputes unique. Family businesses at their core are extensions of family relationships.

Often fractures in the family dynamic spill into the business domain. Likewise, expectations that family members have about their roles within the family structure can cause friction within the business. Business values and family values many times overlap, but they do not necessarily align. Family values often stress putting the family’s interests first and taking care of family members no matter what. Those values, however, may conflict with the goal of maximizing economic return in a business and may lead to a reluctance to dissociate a family member who is misusing or harming the business.

When family and business mix, it may also be difficult for family members to separate their work identity from their family identity. For people who don’t work with family members, this distinction may be easy. But when family members work together, this role separation becomes exponentially more difficult. For instance, siblings may have difficulty taking orders from other siblings—particularly if a younger sibling is in charge. To the extent these identities differ, family businesses have built-in conflict potential.

Families that decide to go into business together would be wise to plan for conflict and provide for dispute resolution mechanisms in advance—preferably at the outset of the company when drafting corporate documents like company bylaws or an operating agreement. This can useful to help family businesses avoid litigation—along with the time and money commitments inherent with it—and prevent the deterioration of family relationships.

One way to do this is to provide for the settling of disputes via mediation. Mediation involves appointing a neutral third party, often a retired judge or attorney with specialized training and a wealth of experience, who will listen to the parties and utilize unique problem-solving approaches to resolve the parties’ dispute. These sessions are confidential and a way for parties to explore and resolve issues without airing the family’s dirty laundry in a public forum where it will be available for anyone to see.

Another option if mediation proves unsuccessful is to provide for resolving disputes by binding arbitration. Arbitration, much more than mediation, approximates a courtroom setting. An arbitrator is appointed or selected, often a former federal or state judge, and acts as the finder of fact and law in the dispute. The parties present their case to the arbitrator who then issues a ruling. Arbitration shares many important similarities with mediation. Arbitration proceedings like mediation are confidential and can be conducted in private. Additionally, disputes are often resolved quicker and at less expense than in a court case. Even where parties resolve their family business disputes in mediation or arbitration, judges typically enforce settlement agreements reached through mediation and arbitrator’s decisions.

Super Lawyers named Illinois business law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the categories of Business Litigation, Consumer Rights, and Class Action Litigation. Lubin Austermuehle’s Illinois family business dispute trial lawyers have over thirty years of experience litigating complex family business and partnership disputes, class action, copyright, noncompete agreement, trademark and libel suits, consumer rights and many different types of business and commercial disputes. Our Chicago and Lisle business dispute lawyers handle emergency business lawsuits involving shareholders, partnerships, closely held businesses and employee breaches of fiduciary duty. We also handle other typical commercial litigation matters involving copyrights, trademarks, injunctions, and TROS, covenants not to compete, franchise, distributor and dealer wrongful termination and trade secret misappropriation. We also assist businesses and business owners who are victims of fraud. You can contact us by calling (630) 333-0333 or our toll-free number (833) 306-4933. You can also contact us online here.

Client Reviews
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I was referred to Peter Lubin from someone in the car business to handle a law suit. From the moment I made the appointment Peter and his staff were outstanding. This wasn't an easy case, most lawyers had turned me down. However, Peter took the time to meet with me and review everything. He took on the case, and constantly communicated with me about updates and case information. We beat this non-compete agreement case in record time. I would use him again and recommend him to my closest family and friends. 5 stars is not enough to thank him for his service. Sebastian R.
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I worked on two occasions with Peter Lubin and his staff. They took their time with me and discussed each and every item in detail. The group makes you feel like you are part of the family and not just another hourly charge. I recommend Peter to anyone who asks me for a referral. If you are looking for a top notch attorney at a reasonable rate, look no further than Lubin Austermuehle. Kurt A.
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Excellent law firm. My case was a complicated arbitration dispute from another state. Was handled with utmost professionalism and decency. Mr. Peter Lubin was able to successfully resolve the case on my behalf and got me a very favorable settlement. Would recommend to anyone looking for a serious law firm. Great staff and great lawyers! Albey L.
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I have known Peter Lubin for over 30 years. He has represented me on occasion with sound legal advice. He is a shrewd and tough negotiator leading to positive outcomes and averting prolonged legal hassles in court. He comes from a family with a legal pedigree and deep roots in Chicago's top legal community. You want him on your case. You need him on your opponents case. He won't stop fighting until he wins. Christopher G.