How divorce is far easier than a partnership breakdown
By Julius Grafton, who thinks he has seen it all. But then realizes there is a new story around every corner…..
This is a true story of two guys called Bill and Dave. Because Dave is horrifically litigious, and because the CX law team are still on vacation after an exhausting year of defending us and waging vexatious campaigns against our many enemies, we decided to just call these guys Bill and Dave instead of their real names. All resemblance to anyone living in Australia is intentional.
Bill had a successful but small AV production company and won a major in-house gig after duping the customer with a warehouse full of borrowed gear, a cast of ‘workers’, and a stack of incoming phone calls. All timed for when the customer came to check out his credentials. It looked awesome, because it wasn’t.
Armed with the work – and plenty of it – he badly needed more AV equipment and skilled crew, so he partnered up with Dave and a couple of other local guys. They brought their various kit into the operation, and fielded crew. Under Bill’s roof, everyone prospered. Bill now owned 51% of the new co, which equates to control. Things settled down OK and good gigs were done, with even better cheques cashed.
Somehow it all unraveled, as it can, when four tech nerds all disagree about what brand of mixer to use on a gig, and about who gets to charge what and when. Unclear understandings about boundaries created the equivalent of an open marriage, where everyone was screwing everyone else, and denying it as they wiped the lipstick off the dipstick.
A split eventuated and Bill removed himself, hoping Dave would respect the shareholder agreement and pay him the quit fee in the formula. It went real nutty, and Bill reluctantly walked into a law firm to assert his rights. A case was convened in a court, and the paperwork started to pile up. Dave loaded the guns, and the matter proceeded.
At this stage Bill owned the building that the company worked from, the company he had left had plenty of money in the bank, and they’d retained the fat in-house contract for another 5 years. It could, and should, have run like a Swiss clock – if Dave played the customer service and the employee relationship cards right. But of course what Bill thinks is the right way, is the not the way Dave does it. That’s why they are headed for corporate divorce court. A place that makes the Family Court look like a kindy.
Bill asserted that the company lawyers were conflicted in taking Dave’s case. He eventually had the specific lawyer sanctioned by his accreditation body, but that took some years to happen. Naturally that lawyer made sure that his name can’t creep into print. They are good at that.
“In the end, my case file was apparently over 22,000 pages and I’ve spent just over $419,000 on legal costs over a $360,000 dispute”, Bill told me over an Aperol Spritz.
“If I’d known how bad the court system was, I’d have done things differently. In the end, the dispute became more about the legal costs just as much as the original amount.”
“In my opinion, if a decent Judge had run the process properly back at the start, it would have been resolved that year.”
The end result is that Bill won, and Dave lost. But it took years and years to play out.
“How did I fund the $400,000 legal costs? $100,000 came from the settlement. The balance was over 6 years and was funded by a combination of savings, income from my business and to a lesser extent, the payments that Davestarted to make in 2007. I wouldn’t have been able to fund any further. If the case was run and adjourned, I would have been in trouble.”
We ordered another round of drinks.
“Strangely, this $360,000 dispute probably cost Dave about $1 million once he paid the principal, and my legal costs as well as his. He put in an astonishing effort to screw me over. If he had put as much effort and money into running his business, he would have been well off.”
“The company lawyers that hid paperwork from me, assisted with the manipulation of company records, minutes of meetings, “phoenixed” companies and just had a doosey of a chargefest.”
“The Law Society dismissed my complaint against them so I appealed in (my state) Appeals Tribunal.”
“I represented myself and won the appeal. The Law Society were ordered to prosecute the lawyers. The main offending lawyer had to resign from his position at the Law Society (ironically) and was officially reprimanded and ordered to pay costs. He also was demoted and lost his partnership at the firm.”
“He did manage to have his name suppressed which really irritated me. My lawyer told me not to worry about it because I had cost him his positions and it would have cost him about $300k for his defence in the tribunal. In his words “Don’t worry Bill, he thinks of you regularly”.
Bill switched to the hard stuff, and I finished off my Don Benedictine.
It was dark outside, and a table near the door roared with laughter. Three guys in suits were sitting with two executive suited ladies of a respectable age. The mirth had been building in volume for some time.
The ladies were reading transcripts from some divorce cases in the Family Court. The table was from a large law firm over the road.