Avoid Business Litigation with These Helpful Tips!
Litigation can be expensive, time consuming, stressful, and more importantly, a distraction from running your business. While litigation is sometimes unavoidable and/or necessary, there are some things you can do to possibly avoid the hazards of litigation, including the following:
- Improving Communications (Clear communication from the inception of a business relationship between you, your clients/customers, and business partners is essential. Keeping the lines of communication clear and open is critical to avoid litigation).
- Proactively Dealing with Potential Litigation (Identifying and then proactively addressing issues that may lead to litigation is vital. Simply thinking that an issue “will just go away” is never the answer. You should consider developing and implementing policies and procedures, which assist you in not only identifying potential litigation but also assure that the issues are properly and timely addressed).
- Analyzing Your Company’s Past Performance (Understanding your company’s past deficiencies/weaknesses from situations that have previously resulted in litigation can help you avoid costly litigation in a similar situation in the future. Do not keep repeating the same mistakes that resulted in litigation).
- Reducing All Agreements to Writing (While oral contracts are legal and binding, they can sometimes be hard to prove in court. Even a simple confirmation by email or letter is better than nothing. When in doubt, always reduce everything to writing. This way, everyone is clear on what was agreed to and what was not).
- Assuring that You Have a Clear and Understandable Agreement/Contract (It seems obvious, but many times parties enter into confusing agreements/contracts without understanding the duties, rights, and responsibilities of the parties to the agreement. All of your agreements/contracts should be clear, comprehensive and read in their entirety before you sign).
- Obtaining Legal Advice (When issues arise, even if they seem routine, it is always advisable to retain an attorney to provide guidance and insight on the issue. While no one is looking to pay attorneys’ fees, a brief review by the attorney may help to avoid costly and protracted disagreements in the future, which will end up costing you much more).
- Following the Terms of the Agreement/Contract (Many times a person, even a sophisticated business person, may fail to follow the terms and conditions of the agreement/contract they entered into. Failing to follow the terms of the agreement/contract will inevitably lead to conflict and possibly litigation. Be sure to follow the terms of the agreement/contract you agreed to).
- Incorporating Risk Shifting and Litigation Avoidance Provisions (One way to avoid litigation is to include litigation avoidance provisions and/or risk shifting avoidance provisions within your contracts. Some examples may include: cure provisions, mandatory mediation provisions, indemnity and hold harmless provisions, etc. You should always be thinking about how you can minimize your liability and exposure, and if possible, shift that risk and exposure to someone else).
- Maintaining good records (A critical factor in winning case is whether everything has been properly documented. However, maintaining good records can also help to eliminate potential litigation by providing those well-maintained documents to an adverse party prior to litigation).
- Attending Pre-Suit Mediation (If both parties to a dispute are genuinely prepared to compromise, mediation is almost always worth it. Mediators can provide an independent assessment of parties’ positions and also assist parties in identifying creative solutions to resolve conflicts).
- Being Prepared to Compromise (Litigation is fraught with uncertainty. Do you really believe a judge and/or jury will 100% rule in your favor? You should always be wary of those that tell you that your case is a “slam dunk” or “guaranteed.” Simply put, there is no such thing when dealing with juries and/or judges.
In sum, business disputes are inevitable; however, litigation does not have to be if you employ the above tips and suggestions. Spend your time running your business and not fighting an uncertain and expensive case in court.