More HH Legal Updates

Houston Harbaugh is a full service law firm headquartered in Pittsburgh and serving Pennsylvania, West Virginia and Ohio. This collection of blogs further highlights the firms capabilities in several practice areas.

Succession Planning is No Laughing Matter

A recent episode of the hit television comedy series, Modern Family, tackled the issue of succession planning. The series features three families who are interrelated through the family patriarch, Jay Pritchett, the successful owner of a closet construction company.

For the past few years, Jay’s adult daughter Claire has been working for him. Previously, she had been a stay-at-home mom and she now works very hard – including putting in long hours, working on weekends, and missing family functions – all for the family business.

In the recent episode, the family is gathered to celebrate Christmas when Jay announces he is ready to begin transitioning to retirement and has selected a very capable successor to run the company – Chuck Feeney.

The whole family is shocked, and as one might expect, Claire is angry. But it turns out Jay’s story about Chuck Feeney is just a test to make sure Claire truly wants the business and doesn’t accept the responsibilities out of a sense of obligation.

While the show is merely a parody, unfortunately Jay’s ruse is not all that far from the truth of how some family businesses are transitioned.

So where did Jay go wrong and what lessons can we learn from his mistake?

  1. Succession planning is a process. Deciding today that you are retiring and handing over the keys to your child tomorrow may not be the most prudent move for the long-term health of the company. What about the other key managers in the company who may have been there many years before Claire’s involvement? Would one of them be more suited for the role of president? Will they respect Claire? How will they react? Does she have the management skills to oversee the finances, operations and sales of the company? Will she have credibility with customers, vendors, the marketplace, even potential new hires?
  2. Discussions need to be made with the family long before the transition is to begin. Jay could have saved a lot of heartache and frustration had he been honest and candid with Claire in advance.
  3. One aspect of succession planning the show did not address was the impact on Jay’s other children, in this case his son Mitch, as well as on Gloria – his second wife — and her son Manny. Will they expect a voice in the decision or the future running of the company? Will this preclude certain opportunities for them? Will they have shares in the business? Will they have seats on the board? Voting privileges? Will they get their “fair share” of their ultimate inheritance?
  4. The show also doesn’t tell us what Jay is getting out of the business as part of his retirement package. Surely he isn’t going to just walk away without reaping the benefits of his years of investment and commitment in building the company.
  5. Perhaps the most important lesson we can glean from this story is that the future of the family business is too important to engage in mind games when it comes down to making some of the most important decisions. An orderly transition plan that includes and is developed with family members and other key stakeholders dramatically increases the chances of family businesses surviving multiple generations.

It also helps to ensure peace and harmony within the family which is no laughing matter.

About Us

Trusted and Cost-Effective Business Law, Business Litigation and Estate Planning Attorneys and Counselors; Building Client Confidence™ with Businesses and Individuals Since 1975

Our firm offers individualized solutions and the highest quality, client-driven and cost effective legal services. Houston Harbaugh, P.C., is a well-known law firm in Pittsburgh, serving Pennsylvania, West Virginia and Ohio. Our diverse practice areas include Business Law, Business Litigation, Estate and Succession Planning, Intellectual Property Litigation and Prosecution, Employment and Labor, Employee Benefits, Oil and Gas, Landowner and Property Dispute Counseling and Litigation, Health Care, Environmental, Real Estate, Construction, Complex Tort and Catastrophic Injury Litigation, Insurance coverage and Bad Faith Law, Mediation, Arbitration and Special Master appointment work. As one of the 20 largest law firms in Pittsburgh, our lawyers serve clients on a regional and national basis.

We regularly represent regional, national and international insurance carriers in defense, insurance coverage, unfair trade practices and bad faith matters, and we issue opinions letters and coverage analyses for insurers. We defend designers, manufacturers and sellers in pharmaceutical, products and medical products liability matters and we litigate and try cases involving catastrophic injuries, industrial accidents, toxic torts, professional, engineering and architectural negligence, and agent and broker claims and lawsuits.

Why Houston Harbaugh, P.C.? The Answer Is Clear.

We are accomplished litigators with a strong track record of success in the courtroom and in jury trials. We design and manage business transactions, succession planning, banking and regulatory issues. Our firm has regularly been featured in the U.S. News “Best Lawyers”® rankings of Pittsburgh’s “Best Law Firms.” Our attorneys are also regularly nominated as “Best Lawyers” in this publication. In addition, many of our attorneys are consistently recognized in the annual national Super Lawyers peer review rankings, and our corporate practice has been selected as the winner of The Legal Intelligencer’s Best Law Firm Corporate Practices contest for the Midsize Firm category. Our property and landowner counseling and litigation practice in Oil and Gas and Real Estate is ranked at the top on a regional basis. We help clients to apply for, prosecute, audit, manage and protect intellectual property rights in patent, trademark, copyright and trade secrets. We are admitted to the USPTO and have experience in the TTAB. Some of our firm’s shareholders are Adjunct Professors of Law at the Duquesne University School of Law in litigation and intellectual property courses.

Helping You Achieve Your Goals For Over 40 Years

Since our inception as a health care practice in 1975, our attorneys have represented clients in state and federal courts in Pennsylvania, West Virginia, Ohio and throughout the nation. We have grown into a multi-disciplinary practice with the ability to handle complex business transactional and litigation matters. We counsel on estate and succession planning and on trust and guardianship matters. We have a strong employment and labor practice. We represent clients in trade secret counseling and federal Defend Trade Secret Act (DTSA) counseling and litigation. Our DTSALaw® practice group is well versed in this federal body of trade secret law. We counsel, draft, litigate and defend claims involving employment non-compete, restrictive covenants, non-disclosure agreements and breach of contract matters. We service clients in the collection of debts and in bankruptcy creditor matters. Houston Harbaugh litigates in Orphans and Probate courts for matters involving estates and trusts. We also provide mediation and arbitration services to parties involved in litigation and our lawyers are currently serving as court appointed special masters in the Federal Courts.

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For more information on how we can help you, call our Pittsburgh office at 412-281-5060. You can also reach us online.

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