Louis Lehot on Business Divorces and Insurance Companies

Louis Lehot
4 min readOct 11, 2021


By Louis Lehot, a business and technology lawyer at Foley & Lardner LLP in Silicon Valley

Breakups hurt — both financially and emotionally — in both business and in marriage. Just as sociologists have predicted spikes in marital divorce rates, there is now a noticeable increase in partner disagreements in healthy, thriving businesses. Insurance companies are no exception. To survive and thrive through financial turmoil, insurance companies will need to make some difficult decisions.

Business owners and investors in the insurance industry need to be aware and come to terms with an increase in “ business divorce” which is one of the most painful events any business owner can experience.

From the outside looking in, it is “just business,” but the business dissolution often creates as much emotional drama as a divorce between spouses. Similar to a marital dissolution, a business divorce can be full of emotion, egos, accusations, and expensive legal fees. No matter how well documented the partners’ business relationship is, a business divorce can still be expensive and nasty as parties look for loopholes in contracts, claim financial irregularities, and more.

Louis Lehot on Business Divorce

More and more, insurance companies play a pivotal role during times of economic stress by helping companies and people manage risks and cushion against losses. As one of the largest groups of investors, they are especially vulnerable to volatility in financial markets. It would be smart for insurance company owners to take a look at positions with partners, investors, and investments, and make some hard decisions to protect their future.

While publicly held companies such as airlines making the news these days tend to have diversified investor and owner bases with a corporate structure to address business challenges, many insurance firms do not. Instead, many insurance firms have two to three partners and one to two primary investors. They operate through a partnership where decision-making is not streamlined.

During the current COVID-19 pandemic, insurance companies may need to respond drastically when business is not profitable. The coronavirus crisis can be the subject of real disagreement among insurance company owners. It may also affect how owners resolve them. Some will seek to sell shares and member interests, while others may invoke dispute resolution procedures and pursue relief under a governing state statute. We are seeing an increasing number of situations where the owners find that business divorce is the their only viable option.

“Not all corporate divorces are bad, some are necessary,” wrote Désirée-Jessica Pély, a visiting scholar. “That’s mainly when you realize the industry is going down; it’s not a good fit anymore. And there are divorces because maybe it was a bad decision to get married in the first place — you didn’t do enough due diligence to investigate.”

At the onset of COVID-19, there was a great deal of information published about close to impossible exit strategies like force majeure, frustration of purpose, impossibility, outs due to “material adverse change”, management deadlock, and judicial dissolution. Although these are extraordinary times, there is no certainty that these remedies will be successful as pandemic conditions become the new normal.

Consequently, in most cases, business relationships and the contractual agreements cannot just be set aside with equal division of assets and future potential business prospects. Therefore, it is essential that all business partners deal head-on with the operative agreements in their business relationships, with extra scrutiny.

During these extraordinary times, planning is crucial. It is best to take out the partner agreements and get ahead of the problems now.


About the author

Louis Lehot is a partner and business lawyer at the global, full-service, destination business law firm Foley & Lardner LLP. Louis Lehot is a recognized leader in entrepreneurial and transactional lawyering, on a very short list of Silicon Valley’s most prolific deal-makers and advisors to boards and management teams. Louis Lehot partners with clients at all stages of the business life cycle, from ideation to liquidity, from garage to global. He is an ideal legal quarterback for businesses navigating hyper-growth, preparing for initial public offerings, and deftly handling exits. His decades of experience handling a wide range of deals as well as sensitive issues affords him a uniquely 360 perspective when advising clients on day-to-day and bet-the-company matters. A recognized Silicon Valley business lawyer, Louis has been repeatedly acclaimed by industry guides (Chambers USA, Legal500, SuperLawyers, Avvo and more), his peers and the press for his well-documented track record of offering legal strategies and solutions that make sense. Hailing from Silicon Valley and qualified in both California and New York, Louis also splits his time in San Francisco, and Los Angeles.



Louis Lehot

Louis Lehot is a partner and business lawyer with Foley & Lardner LLP, based in the firm’s Silicon Valley office. Follow on Twitter @lehotlouis