Justice is Never Enough
In an effort to gain justice while ignoring forgiveness, family members in family businesses suing each other is not uncommon. In the last couple of years, I’ve encountered several situations in which family members sue each other to seek justice. Never mind that justice is never enough. Forgiveness needs to be part of the picture if a family business is going to survive with the family intact.
Families Suing Each Other
For example, in Newton, PA, Nina Kaplan was successfully sued by her father and is now required to pay $2.13 million due to poor business results and suspicions of embezzlement. Her business was forced to close. A sign on the door read, in part, “My own father suing me. There are no words for this.”
In 2018, Patrick Yu sued his father, Bong Yu, for stewarding their family business in the Yu family's benefit, at Patrick’s personal expense, thereby breaching the fiduciary duty owed to him by his family members who serve as officers in the family business. Hence, Patrick is seeking dissolution of the family business.
In a public, embarrassing action in the Twin Cities, Kim Lund was awarded $45.2 million for her shares in the Lunds & Byerly’s corporation. She had sought $80 million. At the time of this writing, it appears their family dispute is headed to the Minnesota Supreme Court. The judge in this case, Hennepin County Chief Judge Ivy Bernhardson, quoted the Bible at the end of their trial: “But I tell you that anyone angry with a brother or sister will be subject to judgment”. She went on to say to both parties, “Family life is too intimate to be preserved by the spirit of justice. It can be sustained by a spirit of love that goes beyond justice…while they are only words, there are profound thoughts behind these words. I wish the parties peace.”
In the last few years, I’ve seen a sister and brother divide and cut off over $34,000 in a $1.1 million business. I’ve seen four siblings force their 5th sibling – their sister – out of their family business, driving a wedge within the family that will never be removed. I’ve seen a sister and her husband cut off by their siblings because a $200,000 loan wasn't repaid when the $16 million business was failing. I’ve seen another brother and sister nearly cut off from each other because of persistent conflict over capital expenditures of $300,000–$500,000 in a $4 million business. I’ve learned about two brothers who are 50-50 owners in their business and now communicate only through their lawyers.
More recently, Serene Warren has sued her brother, Mark Evenstad, over their now-deceased father, Ken Evenstad, gifting 1.5% more stock to Mark for his unusual success in quadrupling Upsher-Smith's value to $1.1B. The judge called her "entitled" and awarded her $41M rather than the $328M she sought. The family is now estranged after a five-year toxic court battle. A wedge has been driven into the family, and it will likely never be removed.
When Transitions Are Viewed as Unfair
Most senior-generation owners aim to be fair to their children when designing their estate and business succession plans. Still, a surprisingly high number turn out to be very unfair after their plans are fully implemented. Of course, they are not here to see the disastrous results of their planning, leaving their children with emotional and legal issues to work through.
A smaller number of senior-generation owners don't care whether they are fair to their children. Keeping the business functioning is their primary goal, so they give (or sell at a discount) the business to one child and throw a few dollars to the others. I know of two instances in which the father has gifted or is gifting the business to one of his sons, and the other siblings are made owners of the land and buildings where the companies operate. The siblings who got the land and built feel slighted. Their net worth may be $1M-$3M after the gifting is completed, while the sibling who received the business has a net worth of $30M or more.
Is this fair? Yes and No.
"Yes" in the sense that the owner (dad in these two cases) had the right to give his business to whoever he wanted. "No" in the sense that one sibling was given much more than the others, which created resentment in the sibling group toward each other and their parents. Conflict resolution sometimes works in these situations, but as often as not, lawyers get involved. But even if we can reach resolutions for the siblings without lawyers, they will still feel slighted. Resolution is never enough. Forgiving one's parents is essential to moving on and having a full life.
What family lawsuits really accomplish
In all these cases, several things were true:
Retaining money and power was more important than preserving family relationships
The need for justice and “I’m right” eclipsed the need to forgive
The lawyers made a lot of money
Everyone agreed that the loss of family relationships was the greater loss
Nieces, nephews and grandchildren bore the full brunt of the conflicts
Justice vs. Forgiveness
Justice means that the law is applied without prejudice against those who have violated it: violators receive their just punishment for their wrongful actions. Forgiveness means I acknowledge you have violated the law while also accepting the hurt and pain you have caused me. But here’s the catch: I give up the right to hurt you back. I don’t require that you be punished for your wrongful actions.
Forgiveness is tough stuff. It’s not for the faint of heart. While it doesn’t continue to accept abusive, illegal, or otherwise violating behavior, it also gives up the right to achieve equitable outcomes in which the offended party is made whole.
Forgiveness is born in love and grows in the soil of maturity. When you find people who can’t forgive in business (or in life), it demonstrates that their hurt is so deep that it has driven their love for the offender away. Revenge is the natural outcome for those who can’t forgive.
Forgiveness is always a choice. It is not an emotion. Forgiveness usually does not lead to reconciliation or restoration. Still, it does release the forgiver from the bondage of hate and bitterness that often hinders a successful, thriving life.
For family businesses to survive and for families to thrive together, forgiveness must be present and exercised regularly. At times, members must give up the right to be right. And at those exact times, justice must be subordinated to love.
In our hyper-individualistic, money-is-sacred-above-all-else, I-deserve-my-rights-all-the-time-oriented culture, the message of forgiveness and love can be counter-cultural. But without those two gifts that family members give each other, family businesses will likely fail, and the family itself will be forever injured.