Relationships are the driving force behind any business

James Brown

As part of our family business focus week James Brown, managing partner, Hall Brown Family Law, comments on the relationships which drive business.

Almost any business in almost any sector that you can think of is built on relationships of some sort.

Whether they’re founded on a rapport with clients or colleagues, those relationships can take considerable time to develop but, even allowing for all of the effort invested in trying to make them work, there are no guarantees of them lasting indefinitely.

In that sense, there are considerable parallels with relationships of a more domestic nature.

That’s something which has become very obvious to me over more than 16 years as a family lawyer. I have seen many couples who start out together with solid foundations yet end up experiencing difficulties.

Now, whilst myself and my colleagues at Hall Brown might specialise in relationships between husbands and wives (or those intending to become spouses) or civil partners, we fully understand that the collapse of any partnership can also have consequences for a wider circle of people.

Most often, the individuals affected include children, parents, in-laws and friends.

Yet those involved in family businesses are well aware of the potential for trouble at home to impact on the workplace.

They don’t necessarily need to have been formed by those living under the same roof or siblings with the same surname. Nevertheless, family relationships have the ability to derail even successful large enterprises.

During the last decade, of course, we have seen something of a cultural shift in how people approach their personal relationships with a view to minimise the disturbance which disputes or divorce can wreak.

Couples now arguably approach the issue of setting up home together, for instance, with a greater sense of pragmatism than might have been the case in previous generations.

That change in attitude could be due, in part, to the likelihood of their marriages ending in divorce. According to the Office for National Statistics, some 42 per cent of people exchanging vows see their relationships brought to a close in this way.

It’s only natural that men and women want to soften the blow in the same way that they might buy health, home or car insurance to help insulate them from some of the worst effects of an illness, crash or burglary.

After all, how many people would like to feature in the kind of stories about bitter divorces which feature from time to time in our national newspapers?

As a result, a growing proportion of our work features pre- and post-nuptial agreements, which provide a formula by which couples can divide their assets should their marriages not last the distance.

One added factor in that process is a Supreme Court judgement in October 2010 which means that these contracts are afforded greater weight when it comes to untangling marital wealth.

Admittedly, nuptial agreements may still not be legally binding but there’s a general acceptance among couples, family lawyers and the judiciary that they have a substantial part to play in managing the very real and regular process of relationship breakdown.

That’s one reason why I’m sometimes puzzled that there’s not the same degree of appetite among the business community for the adoption of similar documents.

After all, anyone setting up a company needs to take out liability and contents insurance and yet neither thefts or accidents are as statistically likely as a divorce.

It is perfectly true that we have seen more business-related pre- and post-nups in recent years.

Some of those are driven by entrepreneurs themselves but many are insisted upon by parents who want to protect family companies from the potential disruption of a divorce involving a son or daughter working in the business.

Others are driven by investors who don’t want to see companies to which they have committed money (or the businessmen and women who run them) stymied by divorce.

Given that it’s almost impossible to divorce the impact of the divorce process from business planning, it’s not only lawyers but business leaders too who believe that marital contracts – and cohabitation agreements too, for that matter – make sound commercial sense for family firms.

In fact, I’d go so far as to say that anyone planning a relationship of any significance should think about whether it could affect their business.

If they conclude that indeed it might, they should give thought to the kind of safeguards which might be put in place to limit the damage to that company in case that relationship fails.

Without that kind of insurance in place, family businesses built up over generations face the very real threat of being undermined or even swept away in the matter of months taken to conclude a divorce.