Lawyers Confronting the Specific Challenges of Conflicts Within Family Businesses.
This op-ed was originally published in Forbes France on June 30, 2025.
In France, more than eight out of ten companies are family‑owned, according to figures from the Montaigne Institut. As the backbone of the French economic fabric, these organizations account for 60% of the country’s GDP [1]. Behind these striking figures lie far more complex structural realities, marked by family conflicts often stemming from rivalries, tax constraints, or poorly organized succession planning. This issue is particularly pressing, as nearly 700,000 companies are expected to undergo a transfer of governance over the next ten years. It is this critical challenge that this op‑ed seeks to shed legal and strategic light on, drawing on the reflections and experience of our partners Jérôme Marsaudon and Louis‑Marie Absil.
Balancing Family Emotions and Corporate Interest: The Lawyer’s Strategic Role in Family Businesses
From major family rifts to minor scores settled behind closed doors, lawyers stand at the forefront of stories worthy of the finest screenwriters. While few are eager to set aside their legal gown to assume the role of psychologist, lawyers are nevertheless regularly called upon to go beyond their strictly legal function, lending a careful ear to family secrets and unspoken tensions.
In this singular context, the lawyer acts as an objective third party, capable of adopting a neutral perspective in situations where emotion has often eclipsed reason. This ability to step back and assess matters objectively is all the more valuable as the parties themselves may be blinded by decades of complex family relationships.
The governance of family-owned businesses rests on a fragile balance between entrepreneurial logic and family dynamics. When a dispute arises, this balance is severely tested, and seemingly minor disagreements can quickly escalate into genuine existential crises for the company. It then falls to the lawyers to perform a true balancing act, seeking effective and sustainable solutions. Faced with the emotional—sometimes irrational—reactions of the parties, the lawyer must constantly bring the discussion back to the higher interest, the true compass: the company’s best interest.
When Emotions Enter Corporate Strategy
One of the defining features of family businesses lies in the intertwining of personal and professional relationships. While strategic decisions are never entirely disconnected from emotional considerations, commercial disagreements can quickly reignite long‑standing rivalries or reopen deeply buried family wounds. In practice, such disputes carry an emotional weight far unmatched by traditional conflicts between purely commercial partners.
The consequence? Proceedings that might be resolved within a few months in a strictly professional setting can drag on for years when the parties share an emotional and relational history shaped by family ties of varying degrees of harmony.
Behind grievances that appear purely economic sometimes lies an unresolved childhood wound. One such case involved a party who, before a conciliatory judge, ultimately acknowledged that the root cause of the lengthy and costly litigation stemmed from jealousy toward a brother—accused of having always been their father’s favorite, the founder of the family business.
This emotional dimension fundamentally transforms the nature of the conflict. A disagreement over investment strategy becomes a challenge to succession; a divergence over dividend policy takes on the guise of a debate about each individual’s contribution to the family legacy. The legal arena thus becomes the stage for situations—sometimes heavy, sometimes almost absurd—that extend well beyond the company itself and spill over into family meals and gatherings.
Disputes Specific to Family Businesses
Certain types of disputes arise with almost predictable regularity in family businesses. Succession and the intergenerational transfer of governance are often at the heart of the problem. The handover between generations tends to crystallize tensions. A classic scenario: founders struggle to let go, while successors, for their part, are already eager to impose their own style. Poorly managed transitions frequently lead to disputes over governance arrangements or the company’s development strategy.
Another typical—and particularly thorny—situation involves minority shareholders challenging the management of the family majority. Fearing for the safety of their assets, minority shareholders may resort to criticism or legal action to exert pressure, hinder, or even block decision‑making within the company. What follows is often a battle either to force a takeover of control or to secure an exit under the most favorable possible conditions.
Conflicts may also arise between active and passive family shareholders. Those involved in day‑to‑day management generally favor reinvesting profits to support the company’s growth, while passive shareholders tend to advocate for a more generous dividend policy.
All of these diverging interests can lead to deadlock situations that are detrimental to the company. Inevitably, the business itself often becomes embroiled in legal proceedings initiated by its family shareholders: claims for mismanagement, abuse of majority or minority rights—and, worse still, criminal investigations for breach of trust or misuse of corporate assets. Time and money that are ultimately diverted away from the company’s development.
Added to these well‑known dynamics is a particularly delicate form of blindness: the refusal of a family member to accept that a close relative may be taking advantage of them. Blood ties create a presumption of trust that can be difficult to challenge, even in the face of clear evidence. Lawyers then find themselves in the uncomfortable position of having to open their client’s eyes to a reality they would rather ignore.
A Family on the Brink: The Art of Crisis Management
The pursuit of negotiated solutions should always take precedence. Mediation, strongly encouraged by the French courts, has proven effective in defusing conflicts within family businesses. Unlike judicial proceedings that designate a winner and a loser, mediation makes it possible to craft tailor‑made solutions that respect the interests of all parties. Yet here too, irrationality can derail even the most promising initiatives. One striking example involved a mediation concerning stakes worth several million euros that collapsed after months of negotiations because the agreed solution would have resulted in a tax liability of a few thousand euros—an amount no family member was willing to assume. A perfect illustration of the disproportion that can arise between pride and economic rationality.
When litigation proves unavoidable, the objective is clear: to prevent escalation and preserve, as much as possible, the family’s assets—both tangible and intangible. Lawyers must devise a litigation strategy that takes into account not only legal considerations, but also the psychological and patrimonial dimensions of the conflict. They often assume the crucial role of a lightning rod, absorbing excessive emotional charges that, without their intervention, could derail any attempt at constructive dialogue. This ability to defuse tensions, bring clients back to reason, and continually remind them of what is truly at stake—most notably the company’s best interest—constitutes invaluable added value in these explosive environments, where conflicts are prone to becoming deeply entrenched.
At the end of such proceedings, solutions generally converge toward two main outcomes: a restructuring of governance to restore operational balance, or the buyout of the dissatisfied shareholder’s stake. The latter option, often favored as a means of restoring calm, is not without its drawbacks. It typically involves the company itself redeeming the minority shareholder’s shares, thereby weakening its own balance sheet for the benefit of the departing party. While this solution may put an end to the conflict, it can also durably undermine the financial stability of the family business.
Anticipate to Better Thrive
Faced with such risks, it becomes clear that the most effective strategy remains anticipation. The drafting of robust shareholder agreements, tailored articles of association, as well as extra‑statutory family agreements or family charters, are invaluable tools. They help structure relationships between family members, anticipate potential points of friction, and facilitate generational transfer.
The establishment of a dedicated forum for dialogue—separate from traditional corporate bodies and potentially involving trusted third parties—is strongly recommended. The creation of a family council or family committee may be provided for within an extra‑statutory agreement, with the aim of representing the different generations of the same family. This family committee thus becomes the cornerstone of balanced family governance, offering a privileged space in which family matters can be addressed independently from the company’s operational challenges.
Such a body serves as a bridge between family dynamics and the company’s development strategy. Its scope of action may include succession planning or raising awareness among descendants of the company’s key challenges. Endowed with the legitimacy to make decisions binding on all parties, the family committee may even play a direct role in resolving disputes.
Lastly, investing early on in sound legal advice—whether prior to the creation of a family business or throughout the life of the company—constitutes one of the pillars of a healthy professional relationship, particularly when it comes to managing the increasing dispersion of share capital across generations.
A true balancing act, dispute management requires reconciling the defense of legitimate economic interests with the preservation of valuable family ties, while navigating between the strict application of the law and the pursuit of amicable solutions. Let us not forget that family businesses also represent a particularly resilient economic model, capable of weathering storms with a long‑term vision. Anticipation, communication, and tailored support are the keys to transforming tension into opportunities for clarification—and, at times, for the reinvention of the family project itself.
Our Litigation team supports executives and family businesses, particularly in the prevention and resolution of shareholder disputes.
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