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Breaking From Your Spouse Without Breaking The Business

Special Considerations When Businesses Are At Stake In Divorce

BY // 02.24.23

Divorce is never easy. When partners in a marriage own a business, divorce can get more complicated. New obstacles arise, and extra steps take place that require expertise and experience in the business realm. Not many divorce lawyers have the experience or background that allow them to navigate disputes regarding businesses— and even fewer have actually practiced in business or commercial litigation. Aligning yourself with a lawyer who has experience with commercial litigation will abundantly benefit both parties involved in a divorce. Here, Carla M. Calabrese and Lee Budner highlight key issues when dealing with a divorce where one or both spouses own a business.

Business owners in divorce, beware. 

Whether you’re the business owner or the spouse of a business owner, divorce presents unique challenges and considerations. Some may think it’s a simply division of bank accounts and personal belongings, but the process is much more involved when your assets include a business. Calabrese says it’s important to work with an attorney who understands how to preserve the function and value of the company, both during the divorce process and in the aftermath. “When a martial estate includes a business, we work to find creative solutions to a property division— while always keeping in mind that preserving the value of the business works to benefit both parties,” she says.

Your attorney needs to understand business. 

One of the first steps in a business owner’s divorce is determine whether the business at issue is community property (property of the martial estate) or separate property (property owned solely by one spouse). This depends on a number of considerations and questions. When was the business founded or inherited? What capital was used to found or operate the business? Did the value of the business increase during the marriage? Next is the critical step of performing a valuation of this business. Whether the valuation is performed by, an agreed-upon expert or by each parties’ independent experts, the valuation process is imperative. Your lawyer needs to not only understand how to utilize a valuation expert to advance their client’s interests but have the commercial background necessary to understand the ins and outs of the expert reports prepared in the case. The process may seem overwhelming, but having the legal team with the appropriate skill set will lend itself to a smoother process.

Budner says, “whether in settlement or in the courtroom, your lawyer needs to be able to advocate for the analysis and positions stated in your expert’s evaluation report and effectively attack vulnerabilities and holes in a competing report.” Having representation who can speak the language and anticipate next steps to avoid any surprises is paramount.

Your attorney needs to understand “discovery.”

While level-headed compromise is always the goal, divorces involving business interests often lead to litigation. “As a family law attorney with training in complex commercial litigation, one of the most effective ways to leverage this background is in connection with the discovery process,” Budner says. “At Calabrese Budner, we know how to identify what information is needed, why that is needed, and how to leverage the tools available in discovery to obtain that information.” Litigation involves far more than attorneys arguing in the courtrooms; most of the real work takes place months before attorneys even step foot inside. Skillful litigation attorneys know how to use tools such as depositions, interrogatories, requests for production, and requests for admission to gain valuable information that they can leverage later to support their arguments before the court.

Finding a family law attorney with the right business and litigation experience.

So, how do you find a family law attorney with the commercial knowledge to protect your interests as a business owner in divorce? Calabrese and Budner both advise that to set yourself up for success in this situation, you must look closely at credentials and experience.

For instance, Calabrese combines her business background with being highly adept at reading and understanding people’s emotions. These two skills allow her to strategically counsel clients to protect what matters most to them. Budner developed his litigation skills in commercial law before he decided that families deserved the same experienced legal representation as big businesses. Now he protects business owners and their spouses in divorce, from the most amicable to the most highly contentious.

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