Avoiding Litigation, A Common Sense Approach to Staying out of Court
The U.S. judicial system, in spite of some of its obvious faults, is still the best in the world. Having said that, law suits are a rotten way to have to do business. Sure a law suit is a better way to resolve a dispute than a duel, but avoiding the dispute is even better.
Here are some very simplified ideas on how to keep you business out of court.
- Preventive Law. We all know about preventive medicine, right? Well your business is entitled to preventive law. This entails looking at things that are done over and over and making sure there are good policies and procedures in place. For example, how do you fire someone? Just because you may have a small business, doesn't mean you shouldn't have a short and simple set of instructions on what to do to avoid problems when you fire someone.
- Good Contracts. In a way contracts are a type of preventive law, but I differentiate individual contracts for specific transactions from policies that cover all transactions of the same type. You can avoid a lot of problems with good contracts. They will help you get the goods or services you expected and/or get paid appropriately when you're done. If your company does the same type of transaction over and over, you can develop some templates so you don't have to reinvent the wheel for each transaction.
- ADR. ADR stands for "Alternative Dispute Resolution" and refers to a number of methods of resolving disputes before resorting to a law suit. Additionally, in California, almost all law suits that are filed in this state are sent to some form of ADR before they are put on the calendar for a trial date. Going into mediation or arbitration even before filing a lawsuit can sometimes save a great deal of time and expense. In all cases it should at least be explored.
- BL-OL. BL-OL stands for Bottom Line Oriented Litigation. This is my approach. Businesses shouldn't be involved in litigation solely for emotional reasons, that's what family court is for. The bottom line needs to be looked at constantly. Would a settlement cost less than the legal fees upcoming? How much will the company save if the President isn't spending so much time dealing with the lawsuit? Is there a business solution that can side-step litigation? Sometimes giving something up, and replacing it, will be cheaper and quicker than fighting over it. Each case is obviously different. But as a rule of thumb, stay out of court whenever possible.
