Good morning. Andrew here. What’s called the “Great Wealth Transfer” — an estimated $84 trillion moving between generations — is upon us. And an emerging industry of consultants to family businesses has sprung up. DealBook contributor Brent Crane goes inside the real-life “Succession” business. Also: U.C. Berkeley School of Law has outlawed AI; DealBook’s Sarah Kessler has a conversation with a creator of the policy. And make sure to take this week’s quiz. (Was this newsletter forwarded to you? Sign up here.)
Keeping it in the family
Doug Baumoel was in his 30s when his family went to war over the family business. His father, Joe, had founded Controlotron, an industrial products manufacturer in Long Island worth over $60 million. Baumoel was heir apparent. But as succession questions loomed in the ’90s, family members began vying for control. Consultants were hired, but they only intensified the conflict, advising members not to speak to each other and to hire lawyers. The company was sold through the courts at a fraction of its value, the litigation consumed much of the proceeds and family relationships took a decade to heal. Baumoel was appalled. As the smoke cleared, he saw an opportunity. In 2003, he founded Continuity Family Business Consulting, in Massachusetts, to “help families prevent, manage and heal from conflict over business and money.” What Baumoel identified 25 years ago as a niche business idea has been supercharged by the so-called Great Wealth Transfer — an estimated $84 trillion moving between generations over the next two decades. Guiding family-run companies through this fraught process is now a booming industry. “The field has just exploded,” said Jennifer Pendergast, a consultant to wealthy families and adjunct professor at the Center for Family Enterprises at Northwestern University. “There’s so much work to be done.” Beside the boutique firms, major banks like UBS and consulting giants like Boston Consulting Group are adding new family-focused services. Consultants use various names to describe their specialty: family wealth adviser, family dynamics officer, family enterprise consultant. They are not lawyers or accountants but something more intimate, employing skills from therapy, mediation and traditional business consulting. Services range from structuring corporate governance to succession planning to guiding philanthropic donations. The consultants’ key selling point is being able to do all of this while navigating the impacts of immense wealth on family dynamics. Dennis Jaffe, a veteran of the industry, said the job is largely about keeping the peace. “Families are terrified of what can happen when a family war breaks out.” Tricky questions Such expertise does not come cheap. Families pay anywhere from $100,000 to over $1 million for a year or two of guidance. And demand is growing internationally, say family advisers, especially in Asia and the Middle East. Because of the Great Wealth Transfer, consultants are assisting more in matters around inheritance — not legal matters per se but social and psychological ones. Some firms have started dedicated offices for this, like Baumoel’s new Center for Wealth Integration. “There are all kinds of questions that families have about, ‘Well, do I want my kids to actually have access to this much money?’” said Pendergast. “‘What’s OK to spend when I grew up in a middle-class household, but now I could buy them each a $30 million home?’” Inheritance anxieties extend to more prosaic matters, too. For instance, after inheriting a fortune, friends might suddenly expect you to pick up every bar tab. This happened recently to a client of Kedge Martin’s, a family adviser in London. How would you navigate that? “He could afford it. But it changed his relationships,” she recalled. “The complexities of wealth and relationships are massive.” Family clients range in size from a handful of immediate members to hundreds of relatives. Their businesses span industries. Sometimes a single family will own several companies plus a philanthropic body, real estate and other assets. Consultants are expected to tackle it all. Devin DeCiantis, a managing partner with Lansberg Gersick Advisors in Toronto, deems this “the entire ecosystem that a family is stewarding together.” An emotional process Typically consultants are brought in before a major event, like a looming succession, the sale of a family business or the hiring of outside executives. Their role is that of a neutral arbiter. The point is to avoid turmoil. This is hard enough in the context of a normal company. But each family business, a la Tolstoy, creates problems in its own way. Once, while building a succession plan for one client, Pendergast discovered that the reason siblings didn’t want their brother to run their company was that he was a former heroin addict. Another time, a patriarch admitted that his children resented him because he’d been incarcerated for price-fixing. Navigating such delicate matters with both deftness and C-suite-style professionalism is the essence of the job. “The only way to have credibility with a founder is to understand how their business works,” said Pendergast. At the same time, clients don’t want to feel like they’re being “psychoanalyzed and put on a couch,” she said. “To the outside world, families look like they are fighting over money,” added Baumoel. “It’s more complicated than that. Mostly they are in conflict over identity issues, complex histories that may involve wealth and, to some extent, differences over ideas around spending, investment and philanthropy.” This was the case with one of Baumoel’s clients, who requested anonymity to speak freely. His family runs a large real estate company and hired consultants to help with succession planning and “intergenerational alignment.” The client said that transitioning the family business was more complex than most people realize, and he was glad to have someone to guide him through it. Their fee was in the “low six figures.” He felt it was money well spent.
A federal judge froze Trump’s efforts to create a $1.8 billion fund. The Justice Department formalized plans for the fund last month, saying it would compensate people the administration finds were harmed by the federal government. The judge’s order, issued on Friday, stops the government from establishing the fund until a hearing is held in June in a pending lawsuit challenging its legality. Pope Leo spoke out against A.I. In a 42,300 word papal encyclical, the leader of the Catholic church warned that the A.I. race could lead to a new “Tower of Babel,” calling for government regulation, protection for workers and safeguards to ensure A.I. does not make decisions regarding the use of weapons, among other things. He presented the declaration alongside Christopher Olah, a co-founder of Anthropic. Anthropic is now more valuable than OpenAI. The company announced on Thursday that it had raised $65 billion in financing that values it at $900 billion before the inclusion of new capital. OpenAI was last valued at $730 billion, not including the $122 billion it had raised. Both companies are planning potentially trillion-dollar I.P.O.s this year. A Google employee was charged with insider trading on Polymarket. The Commodity Futures Trading Commission said the employee, Michele Spagnuolo, bet on what people were searching for on Google, and was sure to win those bets because he had access to internal search data. More big deals: Jamie Dimon says he’s up for spending $20 billion on deals. Meta will charge for its A.I.-powered chatbot. And New York City Mayor Zohran Mamdani announced his own version of Elon Musk’s government cost-cutting program, DOGE.
A law school cracks down on A.I.A.I. may be changing legal jobs. But Chris Hoofnagle, a professor at the U.C. Berkeley School of Law, doesn’t want the technology to transform legal education. “It’s just like you wouldn’t give a second grader a calculator,” Hoofnagle said. “One has to learn the basics of learning before using high power tools that appear to do reasoning for you.” He helped develop a hard line A.I. policy for the law school, which it adopted this month. The new policy prohibits the use of A.I. for conceptualizing, outlining, drafting, revising or editing class work, as well as for exam use and translating. Hoofnagle, who also teaches python programming and seminars on new technologies (“I’m radically ‘pro’ this technology,” he says of A.I.), talked with DealBook’s Sarah Kessler about the decision. Is this an A.I. ban? This is a default policy that any faculty member can opt out of. There’s no decanal review, so one doesn’t have to justify opting out. The idea is to protect the formation of first-year law students by requiring them to do the reading, analysis and argumentation that is constitutive of legal work. Once that happens, Berkeley offers many courses explicitly about A.I. lawyering. What are acceptable uses of A.I.? Self-tutoring, getting ready for class. That would be a permissible use. It could also be used on law journals and so on. Were you seeing something that made you feel this sort of rule was necessary? We had an uptick in misconduct cases. What the administration told us was that our previous policy, where we allowed students to use A.I. for brainstorming and for grammar correction, ended up being a kind of “get out of jail free” card. Students would be fingered for A.I. use, for plagiarism. And then come back and say, well, I didn’t plagiarize, I just grammar-corrected. And what that grammar correction did is that it actually changed the paper. The other thing is that the LLMs became far more capable. It’s possible now to write a graduate level research paper in minutes. Can you really enforce this? The assessments I write test unresolved issues in tort law and present facts that exist nowhere in reality. Another thing I’m seeing are assignments where the student has to show the process of each step of their work. Other faculty are doing in-class writing assignments. I’d say the number of faculty who do an in-person authored exam instead of a take-home has about doubled in the last year. But how would you know if my idea was conceptualized with the help of ChatGPT? We all know our literature really well. So I know the difference between an original idea and one that has been hijacked from an existing commentator. Is it to some extent an honor system? Misconduct rules always have holes. Law students are paying a lot of money, and there’s a lot of opportunity cost to going to law school. There is an earnestness to law students of wanting to improve their skills, and they can’t do that if their assignments just come out of Claude. It sometimes feels like half the world is saying that you need to use A.I. for everything, or you’ll be behind, and the other half makes this argument that if you’re not thinking it all through yourself, you’re losing something. So if I’m just trying to make myself into the best lawyer, is it hard to know which path is right? I think what we’ve come to is that one has to have the basic skills of case analysis and cogent argumentation. Otherwise one will not be able to recognize a quality argumentation from an LLM.
Quiz: Replacing G.D.P.This question comes from a recent story in The Times. Click an answer to see if you’re right. (The link will be free.) Gross domestic product is pretty good at measuring economic progress. It’s not so great at measuring human flourishing. This month, the United Nations presented the latest proposal for an alternative, broader measure of prosperity. The proposal includes 31 metrics. Which of the below is not one of them? We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times. Thanks for reading! We’ll see you Monday. We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.
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