A Checklist of Ways for Businesses to Avoid Litigation
Litigation is costly, time consuming, distracting, and destructive of business relationships. An appropriate question then is: what steps can a business take to avoid, or at least reduce the chance of, litigation? Here are a few thoughts on reducing the prospect of costly and wasteful litigation.
Checklist1. Maintain superior relationships with employees, vendors, suppliers, customers, lenders shareholders, and other parties in interest. The business obviously should not adopt the timidity of Caspar Milquetoast, but the enterprise should strive to deliver what it promised and to perform in full compliance with its obligations. The best way to accomplish this is to perform at a level above the expectations of counterparties. Not only is this a litigation avoidance strategy, it's also good for business.
2. When counterparty issues, problems, complaints and disputes arise, deal with them immediately and be massively proactive in seeking a mutually beneficial solution. Problems that are allowed to fester are more likely to lead to litigation.
3. Have your lawyer draft clear, complete written agreements that leave little room for ambiguity or misunderstanding. Inadequate, incomplete and vague documentation often leads to litigation. Oral agreements are fertile grounds for misunderstandings that prompt lawsuits. Maintain executed agreements in a file system that enables easy retrieval. The best agreement is of no use if you cannot find it.
4. Insert into your contracts litigation avoidance provisions that allow for notice of, and an ample period to cure, alleged defaults. Also include provisions compelling arbitration and allowing for mediation.
5. Maintain safe premises and work spaces. Routinely walk the grounds to look out for broken steps, spilled substances, uneven pavement and other hazards that might cause an accident or fall. Make sure you have adequate liability insurance to protect against all possible liability claims.
6. Search registered trademarks and trade names as well as business names on record before using what you may believe are unique and unprotected marks and names.
7. Review and revise as necessary and comply with the firm's bylaws, shareholder agreements and buy-sell agreements.
8. Develop and maintain a comprehensive and clear set of employee policies and an employee handbook.
ConclusionUnless you view litigation as a sporting hobby, and have large sums of money to fund the fights, follow the foregoing checklist and reduce the risk of distracting and costly litigation.