In this detailed analysis of legal questions generated by the HBO television drama, law firm Squire Patton Boggs walks readers around the issues.

The television drama series about a wealthy family and their ruthless machinations has not just been great drama, but it also raised the debate about intergenerational business and wealth transfer – core subjects for this publication. In the following article, law firm Squire Patton Boggs explores the topic. The author is Geoffrey G Davis, a partner in its Washington DC office. The article was written with assistance from Squire Patton Boggs’ summer associate Meagan Holloway-Ragland. 

The editors at this news service are grateful for permission to re-publish this commentary from Squire Patton Boggs. The usual editorial disclaimers apply. To comment further, email tom.burroughes@wealthbriefing.com

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 out-maneuver 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 benefited from having independent, sophisticated legal advisors 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 advisors 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; and
-- 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 advisors 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 business pressures is key
Upon starting his new role as the head of the WayStar’s Parks and Cruises division, Tom Wambsgans (Shiv’s husband) is given secret documents confirming a massive cover-up of crimes committed on the company’s cruise line by his predecessor – including theft, sexual assault, rape, and potential murder. (At the funeral of the former cruise line executive, it is revealed through discussion between the Roys and the inner circle of the company that his real name is “Lester.” His nickname “Mo” is a play on the word “molester,” as he was known to be one by other executives and the family.) Tom plans to go public about the scandal, but Gerri, WayStar’s general counsel, advises against it. Instead, she orders Greg to burn the documents.

His efforts prove futile when New York Magazine publishes their exposé of the scandal, and a former employee blows the whistle, implicating Tom, Gerri and Kendall in the cover-up.

Soon after, a congressional investigative committee summons the company’s senior officials to testify at a hearing as part of their investigation into the scandal. It is contemplated that criminal charges will be filed, and Tom prepares to take the fall and face jail time. When the family learns that Congress has a witness who will testify, they send Shiv to coerce/bribe the sexual assault victim to take the generous settlement in exchange for silence. (2)

Why did Gerri provide such corrupt and improper legal advice?
Gerri, the longtime general counsel, was appointed interim CEO when Logan Roy was ill. Throughout the show, it was apparent that Gerri had her own ambitions to become the permanent CEO and was driven more by politics and covering for Logan than respect for the law. She clearly had an inappropriate level of involvement in the politics of the company. At one point, Gerri actively competed with the Roy children for the position of permanent CEO. She also had several personal relationships that clouded her judgement. 

Gerri is Shiv’s godmother and treated like a family member. Roman’s perverse sexual fascination with her further complicated the dynamic.

The Department of Justice continually stresses the importance of having a strong corporate compliance program. 

Any criminal investigation will consider all prior misconduct to determine an appropriate resolution and individual accountability, regardless of the individual’s position. Ideally, a company’s legal counsel should avoid conflicts of interest and intimate personal relationships with family members. (4)

If legal counsel has political goals to rise in the ranks of the company and personal alliances with family members, this can undermine the independence of the legal function and fundamentally compromise its critical role. The role of a properly independent general counsel can be assisted and reinforced by having impartial outside counsel vetting important decisions. 

Having transparency and outside counsel up to speed and involved assures the highest level of integrity and helps avoid high risk shortcuts.