Doing Business with Friends & Family- Trouble Ahead?
I cannot tell you how many times a client has approached me with a problem that could have been readily avoided had they taken the time to talk to me at the outset of a business venture. Whether it is a joint venture, a partnership, or the purchase of a home, you need to put your agreement in writing. This is particularly true for business deals involving friends and family. Everyone has their “guard” up when they are dealing with strangers, but somehow they seem to forget how easily things can wrong when dealing with friends and family. I can list any number of cases I’ve had with this problem – friends who opened a restaurant together, a client who invested $100,000 in a shipping business, and family members who purchased a 3.5 million home as an investment. All of these cases resulted in long, protracted, and expensive litigation when a problem arose.
In fact, I really do believe that you are most in need of a lawyer when you are getting involved with someone you know well. When problems arise, you not only put your finances at stake, you are putting your relationship on the line.
Don’t be embarrassed to tell your friend or family member that you think you need a lawyer to review and/or create a document that will establish the parameters of your relationship. You can tell them that you value the relationship more than money (which is usually the case) and you do not want to jeopardize it. Of course, hindsight is always 20/20. When you find that your friend or family member and you are in a contentious situation, it may still be the right time to speak to an attorney.