Preventing Litigation

Preventing Litigation

Protecting assets requires us to assess what we are trying to protect the assets from.  Some risks are greater than others, both in their likelihood and in their capacity for damage.  In my experience, the single most destructive risk any family faces in protecting their assets is inter-family litigation.  Litigation is the nuclear option in a family.  The family may recover from economic disaster, medical crisis, substance abuse, and other dilemmas, but litigation blows the family apart.  If we end up with litigation in the family over the estate or the business, we have failed on every level.

So what do we do about it?

Integrity Agreement

In our Dynasty Estate Planning and business planning model, we strictly prohibit litigation as a means of dealing with conflict.  Instead, we require the participants in the plan to adhere to alternative dispute resolution procedures.  We establish the protocol for avoiding and resolving conflict in a document we call the Integrity Agreement.

In the Integrity Agreement, we define just what we mean by Integrity:

“Integrity” is adherence to a high moral code, a state of being sound, unbroken, and unimpaired, and the quality of being whole, undivided, complete, and united.  Conflict and contention damage the integrity of both the group collectively and its members individually.

Sadly, it is part of the human condition to engage in conflict.  Internationally, this leads to war.  In families, it leads to litigation.  The purpose of Alternative Dispute Resolution procedures such as the Integrity Agreement is to check the natural tendency to conflict and preserve the Integrity of the parties.  Whether a dispute destroys or strengthens relationships depends on what the parties do with conflicts as they arise.  In order to maintain long lasting, mutually beneficial, and satisfying relationships, it is vital to avoid disputes when possible, and otherwise settle them quickly and inexpensively when they cannot be prevented.  Moreover, relationships are improved when the process for avoiding and resolving disputes is educational, amicable, and non-confrontational, and when it facilitates mutual understanding, reconciliation, and unity among the parties.

 How it Works

The objective, purpose and intent of this Agreement is to affirmatively prevent costly, lengthy, and public court battles and the resulting alienation and disruption among the parties.  This Agreement provides a superior method of dealing with disputes with integrity by limiting the available legal remedies and prescribing the venue and process for avoiding and resolving conflict.  Specifically, there is a multi-stage progressively vigorous process for dealing with the conflict in a healthy manner.  There are very specific aids for resolution and details at each stage, which can be briefly summarized as follows:

• Communication — the parties are required to actually talk about the issues.  We do not want closet victims or secret martyrs.  Holding a concern in allows it to fester and become infected with anger and hostility.  It is more healthy to deal with it early in a positive manner and move on.  All communications must be positive.
• Negotiation — If simply talking about it does not resolve the conflict, we provide a negotiation process that helps the parties come to terms with each other
• Mediation — If the parties cannot resolve the conflict on their own, it is time to bring in an outsider.  Mediation allows a third party facilitator to coach or counsel the parties to a resolution of their conflict.
• Arbitration — The goal is to help the parties resolve their issues at the earliest stage possible.  Where that is not possible, Arbitration is a last resort.  Arbitration functions like a trial, only it it faster, cheaper, and we minimize the procedural games that litigation attorneys love to employ to posture for advantage in litigation.

This process cuts to the core of the real problem. So often litigation is the result of a failure to communicate or a failure to resolve conflict in a healthy manner. Sometimes these failures happen because people don’t know a better way.  The Integrity Agreement shows them a better way.  Sometimes these failure happen because litigation attorneys with an agenda very different from preserving the family or avoiding conflict, encourage family members to use the coercive power of the courts to get what they want instead of resolving the conflict.  Conflict is the enemy of integrity. Communication is the ally.  Integrity, and the Integrity Agreement, are highly effective in preventing litigation.

Saving the Family

Litigation destroys the family in addition to destroying the assets.  Asset protection will do no good if we save the assets but destroy the family.  The beginning step to protecting assets is preventing litigation. When we eliminate litigation as an option, we remove one of the most destructive events that can happen in a family and an estate.