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Bob McGaughey: Breaking up is hard to do

By: Melody Finnemore//August 16, 2012//

Bob McGaughey: Breaking up is hard to do

Melody Finnemore//August 16, 2012//

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Bob McGaughey

Bob McGaughey has seen his share of bad breakups over the years. They can be emotional, messy and dredge up decades’ worth of resentment, especially when a family takes sides against each other.

Did we mention that McGaughey specializes in shareholder, partner and LLC member disputes?

As the Portland attorney shares with Briefly Legal, business breakups are remarkably similar to a divorce. And, often, McGaughey serves as a counselor in every sense of the word. His responses have been edited for brevity and clarity.

Briefly Legal: What are the most common disputes you encounter in your practice?

McGaughey: Oftentimes, a second or third generation has inherited a family-run business and resentments come to the fore. It’s like that old Smothers Brothers’ act, ‘Well, mom always liked you better.’ There are some stresses rooted in upbringing. Other times the disputes arise when some members of the family work in the business and others don’t.

We have a lot more strangers going into business together these days. First-generation family businesses tend to work out better than second-generation, and both of those often do better than working with a stranger. With the family-run businesses, they’ve had longer to get to know their partners.

BL: How has the practice area changed over the years?

McGaughey: The law has changed in the last 10 years so that people can now have, in effect, a no-fault divorce. In the past you had to have a cause to break up a business, like breach of fiduciary duty. Now one party can just elect to buy the other out. That makes things go a lot quicker and litigation is never pleasant for people, but there’s not a lot of name-calling going on.

BL: It sounds like you do some emotional counseling along with serving as legal counsel.

McGaughey: It is very much like a divorce and there is a lot of emotion involved.  People will come in and they really don’t like the other person, and money is going to have to change hands to buy them out. I tell people, ‘You can shell out money for me to say horrible things about this person, but 20 Christmases from now wouldn’t you rather give that money to your brother instead of having given it to me?’ Family is family, and people need to take a longer view of it.



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