Why do the wealthy amplify conflicts to unimaginable extents?

Get free updates on Private wealth

Subscribe to our myFT Daily Digest newsletter for the latest Private wealth news delivered to your inbox every morning.

In May, there was a remarkable high-net-worth dispute that captured attention. The long-standing feud between clothing mogul Peter Nygård and hedge fund manager Louis Bacon concluded with Nygård ordered to pay a $203 million defamation award. This marked the largest damages payment ever recorded in a New York state court.

The dispute began over a shared driveway in a gated community in the Bahamas and lasted for over a decade. It originated when Nygård claimed that Bacon’s road resurfacing caused foul-smelling puddles on his Lyford Cay property. As the years passed, the conflict escalated with shocking allegations. Nygård accused Bacon of being an arsonist and allegedly paid protesters at a rally to spread false rumors that Bacon was a member of the Ku Klux Klan. Ultimately, the judge concluded that Nygård had spent $15 million on a smear campaign to ruin Bacon’s personal and professional reputation.

While this case is extreme, it is not uncommon for wealthy individuals to take disagreements to outrageous levels and spend exorbitant amounts of money in the process. British businessman Nicholas van Hoogstraten famously engaged in a lengthy dispute with the Ramblers’ Association over a historic right of way across his estate in southeast England. Although he ultimately lost, the battle became his most notable claim to fame. Similarly, the billionaire Barclay brothers faced legal challenges regarding the governance of the Channel Island of Sark, which only ended after the UK government intervened.

Why do affluent individuals let these disputes escalate to such extremes? It can be financially ruinous and create negative perceptions of arrogance. One possible explanation is that the wealthy are accustomed to always winning and struggle to recognize when to let go. However, this behavior is not exclusive to the rich.

Ashleigh Tennent, the founder of coaching company More Happi, explains that these extreme escalations are just manifestations of a common pattern. It typically starts with one person perceiving a threat from the other. The perception doesn’t have to be based on reality. From there, anger arises and people instinctively protect themselves, leading to a cycle of behavior and further escalation. Egos further complicate matters, leading to an uncontrollable spiral as the stakes increase.

Tennent adds that the real problems occur when individuals tie their identity to the outcome of the argument. While this may apply to the wealthy more prominently, it is not entirely unique to them. If success and always being in the right are core values, it becomes incredibly challenging to let go. For the wealthy, unlimited resources prolong the ability to sustain a prolonged dispute until it reaches the highest courts. James Pirrie, a specialist in high-net-worth divorce and mediation, emphasizes that pursuing a legal route hinders the understanding of underlying motivations and emotions, reducing the chances of finding a mutually satisfactory solution.

High Court judge Nicholas Mostyn once observed, “It seems to be an iron law of ancillary relief proceedings that the final difference between the parties is approximately equal to the costs they have spent.” This statement referred to a case where the disparity in desires between the parties amounted to £687,000, but the combined costs of the litigation reached £652,000.

So, what is the solution? Finding common ground and understanding the other person’s perspective is crucial for reaching a resolution. However, this is easier said than done, especially when both parties have entrenched themselves in their positions and view the other as an adversary. Unfortunately, these escalations are not limited to the wealthy. In fact, Britain is notorious for such disputes, many of which revolve around oversized hedges. These conflicts often result in significant costs, which can be disproportionately burdensome for individuals with ordinary incomes, yet they receive less attention in the media.

Pirrie concludes, “I don’t believe this behavior is exclusive to high-net-worth individuals; they are simply more visible because they can afford to play out their disputes in court.”

Follow Rhymer on Twitter @rhymerrigby

This article is part of FT Wealth, a comprehensive section covering philanthropy, entrepreneurs, family offices, and alternative and impact investment.