A Common Sense Approach to Avoiding Litigation with Business Problems
Over the years, many litigation files have crossed my desk. Nothing could have been done to present some of the suits, but I am amazed at how many of them were preventable. Common sense plays a big part.
1. Put Your Understanding of an Agreement in a Confirming Letter.
When you do business, put your understanding of an agreement in a confirming letter. An understanding, expressed in writing now, can prevent your company or the company you are dealing with, from acting on something you did not offer. You will be amazed at how Atelephone tag@or "e-mail tag" can lead to non-communication between seasoned business veterans. If you put everything in writing, you will either vastly reduce your effective business day, or work excessive hours. But put nothing in writing and you may spend time later arguing what you did or did not agree to five months ago. Use a common-sense balance, and err on the side of reducing your understanding to.
2. Analyze the Agreement for Potential Problems Before Signing.
What exactly does that contract say? What are your remedies? What are you prevented from doing? For example, if you are considering whether to terminate a lease, read it carefully, and seek advice, if needed, before you terminate. Do not act on emotion, or on what was promised orally but not reduced to writing. If you are unsure, seek legal counsel. One of the most effective uses of good counsel (getting the most bang for the least buck) is in evaluating potential problems before action is taken.
3. Problem Audit.
Put in writing a list of potential problem areas and sensitive topics within your business. Often just seeing them in writing will help you to take action before an issue spirals out of control. If, for example, you have that nagging, uncertain feeling about continuing with a written contract, write it down! Many contracts automatically self-renew, or self-terminate if you do not take action by a specific date. If you do not put it in writing (or on your calendar or computer) now, that date could slip by, and you may be locked into something you do not want.
4. Communicate, Through Counsel When Appropriate, But Communicate.
It is amazing how non-communication can create problems. Does that slow pay account really not want to pay, or have they been distracted by another problem? (They may need to be sued, and quickly, but on the other hand, an early telephone call could be more effective.) Is that employee about to misfile the new job orders no matter what, or will a simple question of concern straighten it out? Maybe it is not his/her fault-maybe your assistant gave the job orders haphazardly? Be a good listener. Is the work quality from ABC Company slipping to the point of demanding a switch, or would a call to ABC's president straighten out the problem? Maybe he or she takes great pride in company quality, and is totally unaware of the problem you perceive.
5. Make Use of Arbitration.
Insert arbitration clauses in contracts where you can negotiate them. These clauses simply say that any claims arising out of the contract shall be settled by arbitration (typically through the American Arbitration Association) and that judgment on the arbitration award may be entered in court. Arbitration tends to be faster and less expensive than taking your business disputes to court.
6. Be Proactive.
Don't let problems fester. If you do, the festering may become worse than the original problem. To be successful, you want to be able to act, not just to react.
7. Follow the Golden Rule.
Treat your business clients the way you would like them to treat you.
Following these steps may reduce the amount of your precious business time and money spent in litigation.
