Family Office Insights: Legal Issues Arising From HBO's Succession ' The Importance Of Separation Of Church And State

• Published date: 25 August 2023
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Securities, Shareholders
• Law Firm: Squire Patton Boggs LLP
• Author: Geoffrey G. Davis

What is "Succession" and what can we learn from the Roy family machinations?

On Sunday, May 28, 2023, the hit HBO series Succession aired its final episode of the five-season saga following the fictional Roy family and WayStar RoyCo., one of the largest family-controlled media and entertainment conglomerates in the world. The show depicts the corporate politics and family conflicts in the struggle to earn the favor of the calculating CEO and family patriarch, Logan Roy (Brian Cox). Logan experiences a decline in health as he ages. His children, Connor (Alan Ruck), Kendall (Jeremy Strong), Shiv (Sarah Snook), and Roman (Kieran Culkin) work to position themselves to inherit the company as their father's successor. Not only do they have to compete amongst themselves, but they must also outmaneuver the corporate executives hoping to gain control, such as Tom (a corporate executive who is also Shiv's husband), Greg (a nephew trying to climb the corporate ladder), and Gerri (the longtime general counsel). While the show is fictional, many of the plotlines that unfold in Succession are prime examples of the legal challenges that family offices can face and the need to prepare for these challenges to handle them when they arise. By reviewing some of the most significant moments of the show, we have identified ways in which the Roy family could have benefitted from having independent, sophisticated legal advisers closely assisting the family office organization.

Knowledge of goals and how to run a business is not hereditary, family offices need mission statements and user manuals

To help avoid conflict as the result of the demise or incapacitation of the founder or controlling person of a family office, independent legal advisers can help establish a plan and rules for succession to meet the goals of the family, which can vary from case to case. Some family offices often seek capital appreciation while providing current income to some or all of the members. Some family offices simultaneously have charitable or social goals that need to be taken into consideration. Careful consideration needs to be given to the specific goals and priorities of the family office. Often, this requires canvassing the relevant stakeholders and gathering information. Once those goals have been identified and prioritized, the family can create a written charter or mission statement. This should be a living document, like a constitution, which can be amended from time to time. Family charters, or mission statements, are created by some level of consensus on how to operate and flourish. It governs the decisions of the family regarding the operations of the business and the management of wealth.

A provision in a family charter can establish critical values, such as:

• A firm mandate for legal compliance and ethical business operations
• Prioritizing the collective business interests over individual personal interests
• Identifying future business goals, such as diversification
• Identifying charitable and strategic social investment objectives
• Hiring practices and the requirements and obligations of family members acting in leadership roles
• Establishing a formal leadership succession plan
• Specifying the rights and expectations of family members who may hold an interest in the family business but do not participate in day-to-day operations

This type of mandate would have helped prevent the often destructive but entertaining scramble for power and internal conflicts that drove the plot of Succession. Once the proper conceptual framework has been agreed to, expert advisers can help assist in developing the most efficient protective structure, carefully considering goals, potential taxes, insulation from corporate liabilities and other relevant legal factors.

Maintaining the independence of the legal function from...