Why family offices and family businesses should not settle

Being wealthy also means being a target. Where there is capital, there are claims — some legitimate, many not. The instinct of the modern advisory industry is to make them go away with a cheque. In a listed company, everyone has a reason to settle. In a family-controlled business, settling when the family knows it has done nothing wrong creates a precedent the family will regret for a generation.

In most US commercial disputes, the first recommendation a client hears from counsel is to settle. The calculus in a listed company is easy to understand — managers are on a payroll, lawyers have commercial reasons to close the file, and public shareholders, in aggregate, will never notice. Nobody in that system is spending their own money.

In a family-controlled business, the calculus is different. Where the family is genuinely convinced it has done nothing wrong, we advise fighting the case to its conclusion, regardless of how long it takes. The Westwick view is that families should never settle simply to make a problem disappear, and never accept to be bullied.

The reasoning is twofold. First, settling creates a precedent. The next claimant will assume that a sufficiently aggressive demand will produce a payout. The costs compound across years, in ways that are invisible until the third or fourth claim has been filed.

Second, refusing to settle sends a clear message: family-controlled businesses are not lambs ready for shearing. Families that return blow for blow when attacked, in our experience, rarely regret it over the long term. Families that settle because settling feels easier almost always regret it — usually about a year later, when the next claim lands.

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