How Collaborative Family Law Can Help Protect Your Family Business During Divorce
I recently had the chance to chat with Leah Tolton KC, a corporate lawyer with expertise in Family Enterprises (and Partner from Bennett Jones LLP in Edmonton) on her Beyond Succession podcast, where we explored a topic that doesn’t get enough attention: how collaborative family law can actually save family-owned businesses during a divorce or separation. You can listen to the podcast here: Beyond Succession
Unlike traditional divorce litigation, collaborative family law keeps the courts out of it entirely. Instead, both parties work with their lawyers and a team of neutral professionals (think financial experts, business valuators, etc.) in a cooperative, transparent setting. It’s a much more constructive approach, especially when there’s a family business at stake.
Why does this matter? Well, traditional approaches include expensive processes to value business, often with competing experts offering different opinions. Once value is determined, getting value out to be distributed to the parties is a risk, as court-ordered asset division can force the sale of a business or disrupt its operations entirely. Collaborative law, on the other hand, is all about finding solutions that allow the parties to meet their goals and interests as business owners – such as preserving business continuity, keeping the business stable for employees, and maintaining the legacy you’ve worked so hard to build.
It’s also a private process, which helps keep sensitive business information confidential – which is definitely a bonus if your company wants to avoid public drama and public discussion of its status. Shares and corporate assets are often caught up in litigation, to the detriment of all owners of the business, if the parties do not use a consent dispute resolution process.
Another big advantage? Flexibility. Collaborative law allows for creative, customized solutions that actually work for your unique situation, rather than one-size-fits-all legal rulings. It’s future-focused, too – helping families with long-term planning around wealth, succession, and ongoing ownership.
Divorce is hard, but it is only made harder by an adversarial system where you give control up to a judge. Collaborative parties can:
- Preserve business continuity
- Keep business stable for employees
- Maintain legacy
- Protect confidentiality
- Provide a smooth transition
- Allow for future-focused planning
Partner agreements (like prenups, cohabitation agreements and postnups) can also play a key role here. For family enterprises, these agreements help set clear expectations and protect key assets from legal ambiguity by allowing a couple to set out the rules about specific assets in advance. Agreements can ensure that there is a smooth transition of the family resources from shared to divided without dismantling the future plans for the enterprise, any more than necessary. When these agreements are treated as a normal part of family business planning – like insurance or estate plans – they’re more likely to be accepted as smart and responsible, not as signs of mistrust.
Ultimately, collaborative family law offers a thoughtful, strategic way to navigate personal transitions without blowing up the business. It puts people and relationships first, while still making sure the business—and everything it supports—comes out strong on the other side.
