This post is part one in a series aimed at helping business litigation and family law litigation attorneys expand their arsenal of strategies for helping clients resolve their disputes. To the casual observer, the practice of business litigation and the practice of family law litigation may appear to have little in common. Each practice area has its own separate governing statutes and its own distinct and well-developed body of case law. Indeed, in Massachusetts, business and family law litigation take place in different trial courts, with business litigation often occurring in The Superior Court Department and family law litigation in The Probate and Family Court Department.
Despite the outward appearance of dissimilarity, however, the practice of business litigation and the practice of family law litigation have a lot in common, both with respect to legal principles and with respect to practical challenges. As a result, business litigators can look to family law for potential solutions to problems that arise in both practice areas, and vice versa. At Fitch Law Partners LLP, our litigation attorneys understand that where these two areas of the law overlap, cooperation and consultation among attorneys in business litigation and family law can generate greater insight into the best strategy for resolving our clients’ disputes.
Marriage in Massachusetts, for example, is treated as a partnership. When spouses divorce, the marital partnership dissolves. Where divorcing spouses have signed antenuptial (premarital) or postnuptial agreements, those agreements can provide an efficient and more private framework for the dissolution of the marriage or they can be a cause of greater disagreement between the spouses if they were, for example, not well-drafted or lacking in consideration. Likewise, business partnerships can be dissolved. If the relevant partnership agreement sets forth the procedure for dissolution of the partnership, disputes can be either minimized or increased depending on how clear and comprehensive the dissolution provisions are.
Shareholders in closely-held corporations – non-public companies with few shareholders – owe each other a duty of loyalty known as a fiduciary duty. Likewise, spouses in Massachusetts owe each other a fiduciary duty. There is a significant body of case law in Massachusetts concerning the type of conduct in which fiduciaries can and cannot engage, in both the business law and family law context. In disputes over alleged breaches of fiduciary duties between spouses, a family law attorney may find that the most closely analogous cases involve business litigation and not divorce, and vice versa.
Business litigators and family law litigators also face some of the same types of practical challenges in their representation of clients. In dividing a marital estate, for example, if the couple’s assets include shares in a small, non-public company, disputes frequently arise over the proper valuation of such company. Likewise, when a shareholder in a closely-held corporation seeks to be bought out, the proper valuation of the company is often in dispute. Indeed, wherever a robust market is lacking for any asset, determining the asset’s financial value introduces practical challenges, whether it is a marital asset or a business asset.
Disputes over equitable asset division can concern more than just appropriate financial valuation of the assets, however, in both family law and business litigation. Where assets have sentimental value to one or more parties, whether in a divorce or, for example, the dissolution of a business partnership or closely-held corporation, disputes can arise over how to divide such assets equitably.
One does not need to be a lawyer to understand that psychology and emotions often have an enormous impact on family law disputes. Perhaps less well known, however, is that there are often significant psychological and emotional aspects to disputes among shareholders of closely-held corporations, particularly family-owned companies. Navigating these psychological and emotional factors in both areas of litigation requires flexibility and creativity on the part of lawyers.
Guided by statutes and case law within their respective practice areas, business litigation and family law litigation attorneys have developed their own approaches to addressing the foregoing challenges. Attorneys, however, should avoid the temptation to focus myopically on their own area of law when overlapping legal principles and challenges allow them the opportunity to take advantage of the solutions offered in other practice areas.
This series will explore the above examples, as well as other key areas of overlap between business litigation and family law litigation, in greater depth.