The reality of today’s world is that we live in a litigious society. Litigation is an expensive endeavor to all parties involved, not just financially, but also the lost opportunity costs associated with the amount of time spent litigating the case rather than focusing on your business itself. The best way to avoid litigation is to reduce the risk of being sued or having to sue. Though at times litigation is inevitable, here is a list of five best practices you can implement to help you avoid litigation.
Put It In Writing
Make sure that any agreement you have is captured in writing, and that any modifications or amendments are also documented, approved and signed. It is important that the agreement clearly set forth the parties’ duties and obligations, and to the extent applicable, the parties’ expectations. The less ambiguity in the agreement the better. The clearer the agreement is, the easier it will be for a party to enforce the terms of the agreement without the necessity of having to go to court.
Read the Agreement
Read any agreement you sign carefully and understand its implications before you sign it. It is surprising how many lawsuits are commenced because one or both parties did not fully comprehend the terms of the agreement. Further, while many businesses try to avoid the costs of attorneys, having an attorney review the agreement at the onset can significantly reduce the cost of litigating the case later.
Keep Them Informed
Communication is one of the best ways to avoid conflicts under the terms of an agreement. Keeping each other informed and controlling expectations can go a long way towards avoiding litigation. Indeed, you can often prevent the need for a lawsuit by bringing the issue to the attention of the other party early and trying to resolve the issue as soon as practicable. It goes without saying that if your goal is to avoid going to court, make sure your communications are professional. The better the relationship and communication, the more reasonable the parties will be when and if an issues arises.
Know Who You’re in Business With
You need to know who you are entering into an agreement with. Take the time to check them out and make sure they are professional and are not embroiled in other disputes. If your investigations indicate that they are litigious in nature, then it may be best to steer clear and not do business with them.
Sometimes It’s Better to be Practical Than Right
Sometimes when an issue arises, many business people have the tendency to threaten litigation, thinking the other party will capitulate. More often than not, even if you are in the rights, this will cause the other party to dig its heals in, even threatening to file its own lawsuit. However, if your goal is to make sure the terms of the agreement are fulfilled, rather than spiraling down the path that will lead you to the courthouse steps, try using your sound, practical business judgment to bring the situation to an amicable resolution. Though at times litigation is inevitable, if you can avoid it, you should, even when you are in the right, since principal can get very expensive.
Every company has disputes; it is a known reality. However, most businesses are not in the business of litigating and, thus, not all disputes need to wind up in a courtroom. Thus, if you follow some of the steps outlined above, you may be able to avoid costly litigation and, by doing so, you will be able to focus your time and money on growing your company rather than fighting in court.
Michael N. Feder, shareholder, Gordon Silver
