AIJA Conference: key takeaways

Titled “Venture, Visionaries – Angels, Demons and Other Relatives,” the conference brought together an international cohort of lawyers and professionals to explore the evolving landscape of venture capital and alternative investments.

This was a particularly compelling and timely programme. As more clients, particularly family businesses and high-net-worth individuals diversify into startups, crypto assets, and other emerging investment classes, the interplay between these “new world” assets and traditional areas of legal advice is becoming increasingly important. 

The discussions in Berlin focused not only on the technical aspects of these investments, but crucially, on how we as advisers can better protect our clients’ interests in a fast-moving and often unpredictable environment.

I was honoured to sit on a panel addressing alternative investments before and after divorce – an engaging and thought-provoking session that examined the intersection of family law, tax considerations and modern asset classes.

I was joined by Henning Frase and Charlies Duro, tax lawyers in Germany and Luxembourg respectively. The discussions were chaired by Jennifer Dickson of Withers Worldwide.

The panel explored startups to crypto assets and the unique challenges these can present in the context of relationship breakdown.

Forward planning 

My contributions focused primarily on the protections that should be considered for clients, both before and after marriage. We discussed how essential forward planning has become when advising clients who are building or investing in startups. 

While tax and corporate structuring is often front of mind, it is equally critical to consider the family law implications where a client is in a relationship, intending to marry, or already married.

In particular, we explored the importance of ensuring that shareholder agreements and articles of association are carefully drafted to reflect not only commercial arrangements, but also potential personal developments. Considering:

• How shares are owned and controlled
• How voting rights are structured; and
• What happens if a spouse or partner becomes involved (directly or indirectly) in the business.

A key point of discussion was the need to avoid scenarios where voting rights become skewed or deadlocked between spouses, which can have significant implications for the governance and continuity of a business.

We also emphasised the importance of aligning nuptial agreements (pre- and post-nuptial) with these corporate structures. Any provisions relating to ownership, control, or value of shares should be consistent across both documents, ensuring clarity and reducing the risk of future disputes.

When relationships break down

The conversation then turned to what happens when relationships do break down, and how alternative investments, particularly startups and crypto assets, are dealt with on divorce.

Drawing on my own experience, including a current case I am working on with Phil Rhodes involving crypto assets, I discussed several of the practical challenges we face in relation to crypto assets, discussing the volatility of these types of assets, and how they can  fluctuate dramatically in value, raising difficult questions about timing and fairness in valuation. We also discussed that they can be relatively easy to conceal, creating evidential and disclosure challenges.

I emphasised the importance of involving crypto experts at an early stage, ideally both from an independent forensic expert, and a legal crypto specialist, as this ensures that both the technical and legal aspects are addressed comprehensively. We are fortunate in London to now have in-house legal crypto expertise, which places us in a strong position to support clients navigating these issues.

Key lessons learned

The session naturally led into a broader discussion of lessons learned and what clients and their advisers should be considering at a much earlier stage.

A recurring theme was the importance of proactive planning. For startup founders in particular, this includes entering into carefully considered pre- or post-nuptial agreements, ensuring those agreements reflect the realities of their business structures, and incorporating appropriate protections within shareholder agreements, particularly in anticipation of marriage.

I was able to refer to a recent client scenario in which a business required its founder to enter into a nuptial agreement as a condition of protecting his interest, and the interests of the other shareholders in the company. This provided a practical example of how these issues are increasingly being addressed in real time balancing the need to safeguard the business while also ensuring that a future spouse is appropriately provided for.

Summary 

Overall, the panel was an exceptionally engaging discussion. It highlighted how rapidly client portfolios are evolving, and how essential it is for legal advisers to stay ahead of these developments.

With more clients investing in startups, crypto assets, and other alternative investments, the need for joined-up advice across disciplines, particularly between corporate, tax and family law has never been greater.

The Berlin conference provided an invaluable forum to explore these issues collaboratively with international colleagues, and to reflect on how we can continue to adapt our approach to meet the needs of modern clients.