January 2000
by Edward Poll, J.D., M.B.A., CMC
Growing up, I had the unique experience of going into business with my father. He ran a food manufacturing company, and I left the practice of law for a time to become a member of his management team. I worked with him for four years before we sold the company, and I returned to the practice of law. Those four years were among the most satisfying of my adult life. It was a true learning experience and family affair with older and younger family members contributing to a vibrant, multi-generational enterprise. Whether in the business world or the practice of law, bringing younger family members into the fold can be not only profitable, but very satisfying for both generations.
All in the Family Benefits
- One advantage for the younger generation is that the incoming family member is commonly seeped in the tradition of the law, having grown up at the elbow of a lawyer. As a result of this familiarization, the practice frequently comes more easily in the early years. The younger lawyer is more familiar with the concepts and the language of the law.
- Job security is another plus. It is highly unlikely that the parent will fire the child, even when mistakes are made. In tough times, that clearly is an advantage for the younger generation.
- For the firm in general, the goodwill of the law practice tends to be significantly higher when there is a clear path for the transfer of authority. Where the parent has enough time to properly nurture the growth of the child, and the younger generation can grow into close relations with exist ing clients, they are likely to remain with the firm even on the death or retirement of the senior generation (the parent). This creates value for the firm.
- Another advantage that frequently fails to be verbalized is that the practice can be passed on to the next generation for very little cost. An "insider's deal" can have a dramatic impact on the estate value and estate tax level of the parent.
- And finally, possibly the greatest of all benefits is the close family harmony that results when the younger and older generations have the same commitment, the same work environment and, from all of this, develop even stronger bonds of caring and love than before.
Disadvantages of a Family Affair
Everything comes with price, and family businesses are no exception.
- One of the problems is that parents tend to be more critical of their children. It's one thing to be criticized as a youngster in the family home, but in the workplace, this behavior can be devastating. The parent-child relationship never seems to end, and it takes a very sensitive parent to differentiate the home from the office.
- Another disadvantage is that the parent tends to have higher expectations of their children. Seemingly no performance can be good enough. And when it is, the response is: "That was to be expected, that's my child."
- A disadvantage for the parent is the mirror image of the advantage for the child: The inability to fire a child who is not performing. Because of the family relationship, the parent may be restrained in exhibiting his/her true feelings of disappointment or dissatisfaction with job performance. Anger or criticism cannot be stated in the same manner as with a non-family employee. And additional pressure not to fire the child may come from the other, non-lawyer parent who wants to be sure that his/her child is earning a stable income in a "safe" environment. Despite the dissatisfaction, the parent must frequently just grin and bear it.
- For a family that is not well-adjusted (dysfunctional), working together in the same profession and in the same physical space can add more strains. Saying things that will be regretted later can cause irreparable tears in a family's fabric. Although I am talking here about the interaction among family members, another aspect that needs to be addressed is how family troubles can impact the other employees in the firm. Intra-family shouting matches can cause the employees' work product to go down significantly.
Value Changing Hands from One Generation to the Next
Remember TV's Dr. Casey or Marcus Welby, M.D.? These television heroes were doctors who spent much of their screen time bringing in a new-generation doctor and introducing him to patients before retiring and leaving the practice to this younger practitioner. In real-life medicine, patients tend to stay with the new doctor because of the older doctor's references and because the patient has had a chance to experience first hand the care and concern of the young doctor. There is a natural transition from one generation to the next.
The same concept can occur in the law, especially in the sole practitioner and small firm environment. This is especially true in the growing number of states where Rule 1.17 of the American Bar Association's Model Rules (permitting the sale of a law practice), or similar rule, is in effect. There is a mentoring process that occurs when different generations work together. Unfortunately, this seems to have been lost in today's rush. Once out of law school, with the state's bar exam passed, lawyers are entitled to strike out on their own to practice wherever and however they want. But for long-term growth, maturity and enhanced learning, not to mention the increased economic benefit, a younger generation of lawyers might do well to consider staying closer to home and keeping the law a family affair.
