By: Clark, Campbell, Lancaster & Munson, P.A.
Q: What is a collaborative divorce? Can the process be used in a business divorce?
A: As a litigator recognizing the costs, risks, and extended timeline of an old-fashioned lawsuit, and noting the existing burdens on our judicial system, I look for ways alternative resolution options for my clients. In addition to common methods of mediation and arbitration, the family law arena may use collaborative law, which allows separating or divorcing couples to work with their own lawyers plus one or more other professionals to achieve an agreement that addresses the needs of the parties and their children without the threat of litigation. The couple agrees in advance to have their lawyers collaborate with each other and any third party professionals, who might include, for example, child psychologists and accountants. As the lawyers work together, and to encourage freely sharing information and ideas, the lawyers cannot represent their clients in any family-related litigation that might occur if no settlement is reached. The collaborative process can also be used for prenuptial agreements. Here especially, the process is designed to keep a loving couple from becoming adversarial. Although collaborative law was first used in the United States in the late 1980s, it was not until March of this year that Florida became the fourteenth state to adopt a uniform law when Governor Rick Scott signed a version that imposes confidentiality on communications during the collaborative process.
In a business partnership, much like a marriage, the parties should not delay discussing ownership of assets, contributions and obligations, and what happens if it all goes south. When things do go wrong, it is helpful to have had a clear and structured agreement in place to guide the process and avoid litigation. But even with the clearest agreement, emotions can run high during a business divorce. The costs of experts to value interests during a buyout and the intrusiveness of financial, asset, and intellectual property disclosures might lead businesspeople to want to find a better way than a lawsuit. The collaborative process can be used in business formation, restructuring, buyout, and dissolution. Unlike family law, it can be done completely without filing of any petitions and without regard to any court rules.
Like mediation, the collaborative process allows the parties, who may have creative ideas for resolution, to retain greater control over the outcome, with a settlement offer being accepted only if all parties want to do so. Unlike mediation, however, the collaborative process eliminates the third-party facilitator who guides the process and places the parties in the driver’s seat. Many businesspeople prefer to drive with the legal and financial professionals helping to navigate.
In considering whether to use the process, it bears repeating that the collaborative lawyer is not able to participate if litigation eventually arises. But collaboration is almost always less expensive that the long path to trial. It also has the business benefit of keeping trade secrets and confidential business information out of the public record. Under the right circumstances, the process can even preserve a relationship from becoming a burned bridge by focusing on mutual respect and openness. In the business world, the collaborative approach can make a lot of sense.
The July 14th edition of “The Law” will discuss the process and ramifications of homeowner’s associations foreclosing on their owners for delinquent assessments.
Questions can be submitted online to email@example.com
Latest posts by CCLM Law (see all)
- Choosing the Right Business Structure - September 19, 2019
- LLC’s Electing to be taxed as S Corporation - September 5, 2019
- Defect Disclosure Requirements for a Residential Sale - November 1, 2018