By Maya Shulma
When clients meet with me to discuss their legal options for ending a marriage, the conversation frequently expands to matters of business assets and property.
Beyond marital status, children, personal finances, and emotional entanglement, many couples I see in my family law practice also own businesses and commercial property together. In these cases, breaking up the marriage means separating business interests too, a process that can be treacherous in an acrimonious divorce.
To steer my clients through this perilous process and protect their financial interests, I almost always offer this advice: Stay out of court.
Here’s why: If you can reach an agreement without going before a judge, you’re more likely to survive the divorce process with your business assets intact. When I help my clients negotiate a settlement they can live with, they avoid going to court, which saves time and money. They also retain greater control over what happens to their business than if they had left the decision up to a judge.
I’ve represented hundreds of clients throughout Los Angeles, Ventura and Santa Barbara counties over the past two decades. My experience has convinced me that things can be resolved out of court, and should be resolved out of court.
Part of the problem with courts is that they are unpredictable and may be hard to navigate, even with a good lawyer by your side. Judges can make life-impacting decisions for a couple that neither party is happy with.
In marriage dissolutions involving joint business ownership, a judge may also appoint a receiver. This process essentially hands control of the business over to someone else, who the couple must then pay for management services.
Being forced to hand business assets over to a receiver is the worst possible outcome in any divorce situation involving joint commercial interests. The receiver runs the business, decides what happens to it, can sell it, appraise it, write checks for it, and manage it. Even worse, their fees are enormous. Often, couples will end up paying fees to a whole team of professionals taking on the receivership duties.
In essence, going to court is the one sure way to make sure you will have no business left to divide.
Settling out of court has other benefits. Divorce and custody proceedings can drag on for months, piling stress on clients and their children, and draining families financially, irrespective of whether or not business assets are involved. Just getting a hearing in Los Angeles County during the COVID-19 pandemic can take upwards of six months.
In contrast, settlement conferences can be scheduled at the convenience of the client and are usually less time consuming than a multi-day trial in a busy courtroom. A skilled family lawyer can negotiate a compromise that both parties can accept, reducing unnecessary stress and expense, and allowing clients to quickly move on with their lives.
Although some cases do require litigation, such as those involving domestic violence or child and spousal abuse, going to court should be a last resort for most people. Sadly, some people do decide to pursue litigation simply to “get their day in court,” even though it’s not necessary. Others are persuaded to go that route by attorneys driven by personal financial motivations that don’t reflect the client’s best interests.
I believe strongly that if there is a chance to settle the case, settlement is always more productive. Litigating every single issue is unnecessary, expensive and risky. No matter how difficult the divorce, taking the fight to court can be disastrous for both the client and their business. Finding a compromise is key.
• Maya Shulman is the founder of Shulman Family Law Group, which has offices in Calabasas and Santa Barbara.