You likely came across this article if you Googled the term “shareholder dispute.” However, it is just as likely that you Googled the term “business divorce.” One business owner suing the other(s) to be bought out, or some other escape, is often rightly referred to as business divorce because it is analogous to a divorce among spouses in obvious ways. This posting is about the less obvious ways the two types of legal actions are similar.
Having a judge referee, or even dictate, the terms of the “breakup” is the most obvious analogy. But the interpersonal dynamics are often remarkably similar as well.
Every relationship – not just marriage – has a certain dynamic, and one such dynamic often exists in shareholder dispute litigation. If a minority shareholder feels that she or he has been mistreated to such an extent that a business divorce is the only real option, chances are the mistreatment did not start yesterday. And a relationship where one party has been mistreated for years – like a true marriage – often results in one party questioning the wisdom of trying to “escape” the relationship.
Doubts can creep in. What if my partner is right, and he really is the brains behind the business? What will she do to me in retaliation for starting a lawsuit? Will I be blamed for any harm caused to the company by a lawsuit? Do I really want to spend money on a lawyer? Will the result be better than what I have now? Perhaps the most nagging question of all can be, can I really prevail, when my business partner has access to all the company records, and seems always to be in control?
At the risk of delving more into psychology than law, such questions and doubts are perfectly normal. Very few except the most aggrieved and steel-willed would enter into business divorce litigation with no trepidation at all. But of all the clients I have had over the years, vastly more have regretted waiting to start a shareholder dispute suit than have regretted filing it in the first place.
If you have any questions about this post or any other related matters, please contact me at firstname.lastname@example.org.