What "Arrested Development" Teaches the Family Business

The award-winning TV sitcom Arrested Development, now in re-runs on Netflix, was premised on the rise (and mostly fall) of an American family business, the Bluth Company, owned by a comically dysfunctional family.

Engaged in “mini-mansion” real estate development in Newport Beach, California (and, illegally, Iraq) the Bluth Company fell on hard times when its President, George Oscar Bluth, Sr., was arrested and imprisoned for securities fraud and embezzlement. His son, Michael, stepped back into the company to lead it and try to save the family from itself.

The plot line, acting and script are hilarious, but the show also offers some serious teachable moments about family businesses. Here are some lessons learned from the show that you might recognize in your own business:

1. Don’t let your company and its officers commit crimes. Know the law, and install effective checks and balances on executive power.
2. Don’t pay a family member for doing nothing. Get rid of any sense of entitlement among family members just because they are family.
3. Recruit a board that takes its job seriously and exercises meaningful oversight. Include independent board members.
4. Adopt policies of honesty and transparency in corporate governance and among the shareholders.
5. When a conscientious leader emerges to help the business through a rough patch, recognize and follow him or her.
6. Seek out and rely on professional accounting and legal advisors who are knowledgeable, competent and have integrity.
7. Don’t convert your primary business assets (here, a model home) for family personal use.
8. Cut out the “deadwood” and concentrate on rewarding and retaining productive employees who can improve the company’s earnings and profits.

It’s obvious that the writers of the show consulted with knowledgeable family business experts. The show is a collection of episodes illustrating exactly how not to run a family business. If you want to feel better about your own family business, you might want to check it out.

Keith Baldwin is a business transactions and securities lawyer with a forty year history of serving clients’ legal needs. Keith focuses his practice on business relationships, including mergers and acquisitions, agreements among owner-entrepreneurs, and best practices for corporate governance. Keith can be reached via email at keithbaldwin@dwt.com or directly at 425.646.6133.