Box Family Advisors Blog

John G. Wofford, Esq. and Douglas D. Box discuss LBGT family business issues at the FFI's 2010 conference in Chicago

As issues involving lesbian, gay, bisexual, transgender (LGBT) become more commonplace in family owned businesses, it is important for advisors to increase their awareness and sensitivity to the challenges this dimension can present.

Changes in society’s treatment of LGBT issues has been rapid in recent years, both within the US and the larger international community.  According to a report by the Human Rights Campaign released in July 2007, nearly 90% of the Fortune 500 companies of the US now include workplace protections based on an employee’s sexual orientation, up from 51% in 1995.  Moreover, 53% of the same 500 have added benefits for same-sex domestic partners.  And 25% of those companies now include gender identity in their non-discrimination policies, up from 15% in 2006 and 1.5% in 2003.

With this rapid change, intense and emotionally charged conflicts are not uncommon.  In a family business engagement, strong views on all sides can emerge.  Surprises, family secrets, and generational differences can pose formidable challenges for the advisor and the functionality of the family enterprise.

Earlier this month (Oct. of 2010) I was asked to help facilitate a discussion at the LGBT forum held at the Family Firm Institute’s annual conference in Chicago along with my colleague John G. Wofford, Esq.  Included in the discussion was a presentation of the 10 “best practices” for family business consultants or advisors to keep in mind when dealing with LGBT issues in a family business.  For more information or for a copy of this white paper contact me at doug@boxfamilyadvisors.com.

OK, lets start with a pretty safe assumption: that most family-owned companies (as well as most non-family owned) do not have any type of conflict management system in place.  No one likes conflict and no one likes to think about conflict because its an unpleasant topic.  And yet, the sheer passage of time and the inexorable changes brought on by life cycle transitions is a virtual guarantee that conflict will surface in the family-owned firm.

As a result, many family organizations are very often caught ‘off-guard’ when confronted by a serious conflict that no one saw coming.  Should the issue be allowed to escalate, most organizations will quickly find themselves in crisis mode.

Most family owners believe they can solve these kinds of problems on their own.  But more often than not, they cannot.  And if they don’t, family members will often revert to hiring lawyers to negotiate, threaten or otherwise try to resolve their disputes.

For a family business, this is dangerous.  My view is that the legal process should be an organization’s last resort to managing conflict instead of the first.  But too many family owned businesses have it just the other way around.  They tend to look first at the legal system to settle disputes within their family.  One of my jobs in advising families is to educate them about the many options available under Alternative Dispute Resolution or ADR.  This includes things like mediation, collaborative law, arbitration, peer panel review and the ombudsman, etc.

Most family firms have very limited experience with these non-adversarial approaches to conflict management.  While the legal model of dispute resolution tends to emphasize a ‘rights-based’ approach to resolving problems, an ‘interest-based’ approach is much more flexible and innovative because the settlements derived from it tend to result in much higher satisfaction to the parties while also preserving the relationship.  Needles to say, preservation of family relationships while managing conflict in the family firm is of paramount importance.