Litigation and an Ounce of Prevention
The Hartmann Law Firm
(908) 769-6888; [email protected]
As a business owner or leader, you will inevitably encounter business disputes, which can range from internal issues to external fights, which attack profits or endanger ongoing operations. Business disputes seldom explode immediately into full blown litigation. Instead, like all disputes, they can begin small and mushroom into a lengthy and expensive litigation. The earlier you take proactive steps along this litigation continuum, the better off you and your business will be. Therefore, while business disputes and any litigation they spawn must be dealt with quickly and aggressively, it is useful to consider preventive measures that avoid disputes or at least insure that you have developed the best defenses long in advance.
First Stage of the Litigation Continuum – An ounce of prevention. If you ever do face litigation, remember that litigation seldom begins when you were served with a law suit. So, in advance of litigation, ask: Have I taken the right internal precautions?
- Do you have the right personnel policies in place to prevent racial, sexual or age discrimination?
- Do you have the documents in place to say that what your employee learns at your company is yours and the employee cannot take it with her?
- Have you adopted, documented, and implemented cash and check control procedures?
- Have you contracted with an employee or partner to prevent the person from competing with you for a period after departure so she cannot take what you taught her to another company to defeat you?
- Have you trained people regularly?
- Do you conduct regular audits to insure the business is operating properly from a financial, HR, and legal perspective?
- Are insurance policies in place to cover key litigation and claims risks?
- Do written policies spell out vacation, sick leave, overtime and Family and Medical Leave Act rights?
- Has an experienced lawyer carefully reviewed key customer and operating contracts to make sure the company is protected in terms of warranties, liability caps, and dispute resolution methods?
Second Stage of the Litigation Continuum: The fight begins. Be proactive and focused if you face the first stages of legal battle involving allegations or exchanges of threatening letters.
- Face your opponent assertively with sound legal and financial advice based upon well-researched facts and well-founded policies.
- Do not wait until you are cornered or let the other side disparage your business or hurt you in the press. React quickly and with reason. Do not let your reputation be hurt or your customers diverted improperly. Know the legal avenues available for concrete action.
Third Stage of the Litigation Continuum – Litigation is part of the business and therefore the business leader's full responsibility. Do not turn the litigation over to “the lawyers.” Litigation is not an end; it is a means to an end.
- Can you avoid further expense, damage and diversion of time by settling now?
- If settling now or ever is a weak thing to do and sends the wrong message, what about arbitration or mediation?
- What about a meeting among lawyers and clients/CEOs?
- But never be or appear weak. Appear and be ready to go the distance, while remaining alert to reasonable options.
- Do not let ego get in the way. It costs a lot of money to litigate by ego. You bloody their nose. They are going to bloody yours. You may even want to go one more round. All the time, you are paying legal fees and diverting your attention and your leadership team's focus.
- As a business leader, stay focused on this legal fight as a means to an end. If the litigation does not serve a business purpose, it is misguided.
- Set goals and timetables. Insist on feedback and results. Recognize that seldom, very seldom, almost never is anyone 100% happy with a "litigation" or dispute result. Both sides think they are 100% right.
- That is hard to imagine when you start the case full of confidence that you alone are right, and you proceed with a wind full of righteous justice in your sails.
Nearly 150 years ago, the great German philosopher, theorist and strategist Clausewitz taught that war is a continuation of politics by other means. Today we must remember that litigation is a continuation of business by other means. Keep control and use it to a business advantage, but the best litigation result may be the one you avoid.