October 2000 

Representing the Small Family-Owned Business

By Jeff Alden

Perhaps the strangest call for legal help I ever got came early on in my career, over 20 years ago. My client owned a lingerie shop (actually it was a shoppe) and every Thursday night was Men's Night. Men's Night involved three or four models coming out to the mall, changing into nightgowns and silk pajamas (with an occasional teddy thrown into the mix -- all pretty innocent) and mingling, so that the male customers who otherwise would never frequent the place could be enticed to come in and buy.

However, on this particular night, the models insisted on wearing their bras under the wares that my client was trying to sell. That's why I ended up at what we'll call Silk & Satin one Thursday evening a long time ago in my newly acquired Brooks Brothers suit, trying to assume a maturity way beyond my years. I'd been called upon to negotiate the battle of the bras. Suffice it to say that, for better or worse, I was unsuccessful. Those bras stayed right where they were, thank you very much!

I'm telling you this little story because I think it contains many of the elements unique to representing the small family-owned business (SFB). In the first place, SFB matters often start out with an unusual emergency. This is not to imply that the largest enterprises don't also frequently find themselves in unplanned situations -- witness the recent Firestone/Ford debacle -- but let's just say that the SFB seems to more than hold its own in the unexpected catastrophe department.

Secondly, the SFB problem is almost always personal. Because SFB's are usually run by the person who owns them, when something goes wrong (or is about to), things quickly become very personalized. Generally the problem is costing, or may soon cost real money to the owner/client. The detached management employee is rarely a part of the attorney-client relationship in the SFB situation. SFB owners don't tend to leave important pocketbook-threatening decisions in the hands of the Subchapter S version of Dilbert.

Third, as illustrated above, the SFB problem is often quite unique. Of course it can be argued that all legal problems are unique and in a sense that is true. For most lawyers (despite what we may say to others) the law is truly interesting. Given the different facts of any situation, law almost always presents unique problems to be solved. But in the case of the SFB, this quality of uniqueness is even more-so.

Consider the following not so atypical examples: your client's newly-installed tanning bed has (allegedly) left your client's customer with third-degree burns over her entire body; or, you've just discovered that your client's most trusted employee (and brother-in-law) has been embezzling from him for the past year; or, the new courier service has lost your client's weekly payroll on the way to the bank; or, last but not least, the 10,000 cans of infant baby formula stored in your client's warehouse have turned yellow and decomposed.

But in spite of, or perhaps because of, the nature of these problems, which sometimes seem to come up on an almost daily basis, representing the SFB has been for me one of the real joys of practicing law. The reason is pretty simple. For just as the SFB regularly offers up a veritable smorgasboard of one-of-a-kind problems that need to be prevented or solved, the SFB lawyer regularly has the opportunity to deal with a wide variety of often very interesting work which is of great importance to his or her client.

Jeff Alden is an attorney in Minneapolis whose practice focuses on a wide variety of problems encountered by small businesses. He received his J.D. from Seattle University School of Law, and is a graduate of Princeton University.

"owners don't tend to leave important pocketbook-
threatening decisions in the hands of the Subchapter S version of Dilbert."

What follows are some basic principles to pay attention to when representing the SFB:

The Importance of the Personal Relationship. Perhaps the personal relationship with the client is paramount in all lawyer-client relationships, but (again) it is only more-so in the SFB relationship and cannot be overstressed. Often the SFB client is somewhat isolated. He or she may be the only person with management responsibility in the whole organization, or may have an office in a suburban business park -- a Subway franchise on one side and a truck dock on the other. I know I'm going out on a limb here (I'm no psychologist), but I'll say it anyway: in my experience the SFB client can be lonely.

When the SFB client calls you up he should feel that he's calling a friend -- not necessarily a social friend, but a friend nonetheless, and you should view him the same way. Remember, he is usually calling you with a problem which, one way or the other, will affect him personally and which is more than likely the kind of thing that will keep him up at night. The small business owner is operating without a net.

Don't Be Afraid to Say You Don't Know. In representing the SFB it pays to be flexible. In fact you have to be flexible; a certain kind of looseness is required. (The phrase "rope-a-dope" immediately comes to mind -- that kind of deceptively casual dancing which boxers naturally fall into while the world appears to be crashing in all around them.) Such a posture is very important to the small business lawyer. Often the problems are urgent and the facts confused. Left field is the point of origin for many of the most difficult SFB legal questions. It is important that the small business lawyer relax along the ropes while he or she tries to figure out what's going on.

Small business clients usually don't expect you to know everything about their problem immediately. To get where she is, the small business client has had to learn many totally unfamiliar things herself and she doesn't necessarily put a premium on instant knowledge. Besides, if you don't have it, you don't have it. There's no sense in losing your integrity at the same time you're losing face. So it's important that you (1) not pretend that you have an immediate answer (unless of course you do) and (2) don't let this make you uncomfortable. In other words, relax. No one likes a nervous lawyer, particularly the person who's going to pay your bill.

But Then Make Sure You Find Out. While being relaxed is great, don't relax too much. I don't mean to imply that just because you (hopefully) have a somewhat informal relationship with the small business owner you should treat his or her problems casually. Research is alive and well, and is the glue that holds the attorney-client relationship together. More than likely, the SFB owner has plenty of common sense himself and you should use his experience when fashioning a solution. Listen to him! However, you are the one who knows the law, or at least how to find it. So make sure you do. Don't let your friendly relationship with the SFB lead to off-the-cuff solutions. They are almost always wrong.

It's The Humor, Stupid! You'll remember that Bill Clinton used to keep a sign posted in his war room during the 1992 campaign: "It's the Economy Stupid!" Although it may not sound very poetic, the lawyer representing the SFB should keep a similar reminder -- if not over his desk, then squarely in the forefront of his mind. It's the humor, stupid! I don't mean that you should be cracking one liners all the time. But, by the same token, it doesn't hurt to remember that most legal problems usually are not as hopeless as they may at first seem, and a little bit of humor goes a long way in helping the often besieged SFB owner (and you) get a grip in the storm.

For attorneys who still like to range widely over the legal map, representing the small family-owned business is a natural. Not only does it present a variety of interesting legal work, it may in fact be the last bastion of the general practitioner.