Successful leadership internally manages risks and externally insures for risks that cannot be reasonably managed. This article assumes that you execute your business plan in a legal manner, eliminate dangers from your products and services, and have assumed a limited liability form, which you maintain by keeping up formalities and separation of business from personal assets and records. These measures mitigate in large measure the legal risks of doing business.
A great legal risk to business, especially in California, takes the form of employee claims, which are largely uninsurable. Employee risk is managed first and critically at the recruitment stage. My experience has shown that what I call "marginal" employees are risky employees. Marginal employees are persons who are more likely to assign responsibility to others, rather than to themselves. Interviews and psychological tests can be used within legal limits to determine where a potential employee falls on this scale.
Ensure Employment Manual is Legally Up-To-Date
Once the employee is on board, a reasonably detailed employment manual, fairly enforced, will go a long way towards mitigating employee risks. Ensure the manual is legally up-to-date. Put the manual on your network, so that your supervisors and employees know the legal and business rules and have immediate access to the latest procedures and forms. Create links in online manuals to definitions and forms, so that everyone is on the same page. Stay on top of emerging issues, such as family leave and employee privacy expectations while they are using your employer-provided communications networks.
Business Risk: Contracting
Contracting risks can also seriously damage your business. For each type of transaction that you do for the first time, obtain legal and accounting advice, and develop a standard form that should be used each time. Thereafter, only unusual circumstances for that type of transaction need be elevated to management or legal counsel. These standard forms and procedures should also be placed in a manual, preferably on your network in a secure area. Unusual transactions, not in the normal course of business or involving international parties or environmental liabilities, need management and/or legal review.
All business is becoming more and more international. The complications, expense, and mystery can make international work risky and intimidating for first-timers. However, if you start small, take one step at a time, have realistic goals, develop solid contacts, and take advantage of available international commercial resources, you will manage these risks wisely. Only lawyers w
Business Risk: Environmental
Environmental risks are inherent in the purchase of real property, purchase of other businesses, generation and disposal of hazardous substances, or use of hazardous substances by employees. Due to the strict and potentially ruinous liability environment of hazardous substances, a successful business leader will ensure that his or her business is adequately addressing these risks through well-advised procedural and legal means.
Alternative Dispute Resolution
Oftentimes the time and expense of dispute resolution is greater than the dispute itself. Consider the adoption of progressive alternative dispute resolution procedures in your agreements, perhaps even with your employees. Legal counsel should be consulted to ensure that it is done correctly and whether it is even in your best interests in any particular transaction.
Resolving disputes by litigation is time-consuming, costly and inefficient. To remain competitive, avoid litigation through the provision of well-managed, quality products and services, open and timely communications, experienced legal advice, and prompt attention to early dispute resolution.
Cost Effective Litigation
When litigation is unavoidable, conduct your litigation in a cost effective manner and pursue alternative dispute resolution proceedings which may result in faster, cheaper and no less detrimental results than litigation. The courts should truly be your last resort, absent special circumstances.
You, your corporate attorney, or other responsible manager, should be assigned to manage your large claims and litigation. Formal outside counsel guidelines available from experienced corporate counsel will assist you to effectively engage and manage your outside lawyers. Compliance with these guidelines will determine which lawyers are retained by you in the future.