When I was in law school, the term “Socratic Method” caused fear in my heart. The idea is to foster a dialogue between teachers and students based on asking and answering questions, but the thought of being tongue-tied when asked a question in front of the entire class kept me up at night.
But in her 25 years of working with high-net-worth families in various cultures, including Saudi families, Barbara Hauser has found that applying the Socratic Method can bring about the best results when it comes to family governance. As she explained at a STEP-sponsored event in in New York City, on May 12, interviewing and getting feedback from all family members is a critical step to create an effective and fair family governance system.
Hauser researched family governance issues for her Ph.D. at the University of Zurich Law School in 2021. She explained that her first step when she was hired by a HNW family was to interview each family member to get their perspective on the family itself and the family business. Based on those interviews, she was able to help families find out what their issues were (for example, resentments could ensure if certain family members were involved in the family business and could make decisions while others weren’t) and to help them work out those issues. Once these issues were resolved (which could be a very time-consuming process), she was able to help the families determine what “rules of law” they wanted to put in place as part of their family constitution. Family members needed to agree to follow the rules to ensure transparency, accountability and participation.
Hauser came up with a rule-of-law structure for family decision-making based on the tenet that the rules that the family develops: will apply to all family members; will be arrived at through a just process, incorporating the principles of transparency, accountability and participation; and will include a method to raise disputes.
Benefits
Hauser posits that creating and following this structure will lead to a number of benefits for the family, including fewer family conflicts, a feeling of well-being among family members and a sense of fairness and justice.
