Law firm launches new service for family-run businesses

LAW firm Mace and Jones is launching a new service to help family-run businesses with their complex and sensitive governance and finance structures.

The Liverpool and Manchester-based firm believes that there is a growing need for specialist advice for this sector as a direct result of the recession.

Corporate law partner Ian Hodgkinson said that small businesses should consider setting up a ‘family charter’ to provide their business with its own ‘constitution’.
 
He said: “The recession has brought to a head a number of problems that can arise within an extended family where there is a family business.

“Family firms differ fundamentally to mainstream firms and I have seen many family businesses struggle as tensions flare over key areas such as money and governance.

“However, with clear advice these problems can be foreseen and carefully planned for.

“Family charters – although not entirely legally binding – can provide an essential set of standards which the family has consulted on and agreed with.

“This covers key areas such as how the family wishes the business to be run, the family’s long term strategy for the business, the family’s relationship with the business and how family members behave towards each other in the context of the business.”

Mr Hodgkinson said a charter is especially useful to family businesses where two or three generations of families have direct or in-direct relations with the firm.

He added: “It is important to prevent conflict where ever you can.

“So the charter can examine divisive issues such as how family members get jobs in the business, what qualifications and experience is required for different roles, how they will be paid, how they will be appraised and what happens if someone wants to sell their shares.

“It is also important to avoid feelings of exclusion among family members who are not involved in the business. And critically the charter needs to look at areas such as dividend policy and what happens if there is a difference of opinion in the direction the business should take.”