Closely Held Companies, Family-Owned Businesses, and Related Business Disputes

What business disputes do closely held companies and family-owned businesses commonly face?

Closely held companies and family-owned businesses are typically small to mid-sized companies in which the ownership concentrates in the hands of a few individuals or families. While these types of companies often benefit from a strong sense of shared ownership and a common vision, they can also be particularly vulnerable to disputes between owners or family members, mainly when there is a lack of clear governance structures or succession planning.

Common disputes in closely held and family-owned companies include disagreements over ownership and control, compensation, decision-making authority, succession planning, and family dynamics. For example, conflicts can arise when family members or shareholders disagree about the direction of the business or when one family member feels that they are not being treated fairly in terms of compensation or decision-making power.

These disputes can be particularly challenging to resolve, as they often involve complex legal and financial issues and profoundly personal and emotional dynamics. Therefore, owners of closely held companies and family-owned businesses must work proactively to prevent disputes from arising in the first place by establishing clear governance structures and succession plans and communicating openly and honestly with all stakeholders.

Need help with a matter related to closely held companies and family-owned business disputes? Schedule your consultation today with a top shareholder disputes and derivative litigation attorney.

Which laws and regulations apply to closely held companies and family-owned business disputes in Florida?

In Florida, closely held and family-owned businesses are subject to the same laws and regulations as other companies. Disputes, therefore, will also be based on these laws. In addition, however, specific state laws and regulations may be particularly relevant to closely held companies and family-owned businesses, especially when resolving disputes among owners or family members.

One such law is the Florida Revised Limited Liability Company Act (FRLLCA), which governs the formation, operation, and management of limited liability companies (LLCs) in Florida. FRLLCA provides a framework for LLC operating agreements, which are customizable to address the unique needs and circumstances of closely held companies and family-owned businesses.

Another relevant law in Florida is the Florida Business Corporation Act (FBCA), which governs the formation and operation of corporations in the state. The FBCA guides shareholder voting rights, director and officer duties, and shareholder derivative actions, which can be essential considerations in closely held companies and family-owned businesses.

When resolving disputes in closely held companies and family-owned businesses, alternative dispute resolution options are available under Florida law, including mediation, arbitration, and litigation. Owners and stakeholders in these types of businesses should consult with experienced legal professionals to determine the most appropriate approach for their specific situation, considering factors such as the nature of the dispute, the goals of the parties involved, and the potential costs and risks of each option.

What are common issues regarding closely held companies and family-owned business disputes that lead to litigation?

Closely held and family-owned businesses are vulnerable to various disputes that can lead to litigation. Some of the most common issues that can trigger litigation among owners or family members in these types of businesses include:

• Ownership and control: Disputes over ownership and control can arise when family members or shareholders disagree about the company’s distribution of shares, voting rights, or decision-making authority.
• Management and leadership: Disputes over management and leadership can arise when family members or shareholders disagree about the qualifications, performance, or compensation of executives, directors, or other key personnel.
• Succession planning: Disputes over succession planning can arise when family members or shareholders disagree about who should take over the business when current leaders retire or pass away.
• Conflict of interest: Disputes over conflicts of interest can arise when family members or shareholders suspect that others are using their position in the company for personal gain or when there are allegations of self-dealing, insider trading, or other types of misconduct.
• Breach of contract: Disputes over breach of contract can arise when owners or stakeholders violate the terms of operating agreements, shareholder agreements, employment contracts, or other legal agreements.

When a set of facts results in closely held companies and family-owned business disputes, there are many paths a claimant may take. We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to seek appropriate remedies.

To determine whether your unique situation may necessitate litigation, please contact our office to set up your initial consultation.

Frequently Asked Questions

1. Can disputes in closely held companies and family-owned businesses be resolved without litigation?

Yes, disputes can be resolved through negotiation, mediation, or arbitration, among other methods. It is often beneficial to attempt to resolve disputes through these methods before resorting to litigation.

2. What are some best practices for preventing disputes within closely held and family-owned businesses?

Best practices include establishing clear governance structures and succession plans, communicating openly and honestly with all parties involved, and seeking legal and financial advice to address potential disputes before they escalate.

Have more questions about closely held companies and family-owned business disputes-related situations?

Crucially, this overview of closely held companies and family-owned business disputes does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain a tireless advocate every step of the way. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to set up a consultation.