10 Tips to Help Your Business Avoid Commercial Litigation

10 Tips to Help Your Business Avoid Litigation

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INTRODUCTION

An ounce of prevention, as they say, really is just sound business practice.

Litigation can be ruinously expensive, and even “win� can devour the time and energy you need to actually run your business. It also has a nasty way of damaging your most important intangible asset, your business reputation.

There is no reason to step away from an unavoidable fight, but the advice all commercial attorneys give clients is to avoid finding themselves there. Following are 10 remarkably simple steps you can take to protect your business from the risks of becoming needlessly embroiled in litigation.

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Structure your business to protect important assets.

Most businesspeople understand that the peril of doing business as a sole proprietor is that personal assets can be reached by that is a reasonable risk.

It is important, however, to go a step farther, perhaps structuring assets, such as intellectual property or real estate from the greatest sources of risk, whatever they may be.

2 That is the place to spend your legal budget, rather than on

Without laboring the obvious, make sure that you read and understand all contracts to which you are a party. Ask for

Remember that employment contracts may be appropriate for key employees. Consider whether nondisclosure or

other party into Australian courts. This is when escrows, indemnity clauses, liquidated damage agreements and

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Apropos of which, make sure that your insurance coverage is appropriate to your business risks.

It is not just a quesion of amount, but of the kind of coverage that your business carries.

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Keep good records

Many disputes can be avoided by being able to quickly produce the relevant documents. These should include contractual agreements as well as correspondence and notes taken contemporaneously to record the substance of conversaions and telephone calls. This may be a good ime to review your records retenion policy and to ensure that important documents exist in both electronic form and hard copy.

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Train and manage sta.

Do annual or more frequent reviews and be prepared to terminate the employment of any individual whose conduct could subject the business to a law suit. Make sure that you have systems and procedures in place to help you idenify dishonest conduct.

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Be proacive

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in managing disputes before they escalate into liigaion.

Prompt and effecive communicaion can do a lot to diffuse a situaion with an unhappy customer or business partner.

If the shoe is on the other foot and the dispute is about a nonpaying buyer or client, negoiaing a payment schedule is oten far cheaper and more effecive than a lawsuit.

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Choose who you do business with Especially for new businesses, the temptaion can be to take any client or embrace any potenial partner who walks through the door.

Taking the ime to know a litle more about those you depend on, whether it is a big client, an important vendor or a co-venturer is usually worthwhile.

Disentangling an unwise business relaionship can be very troublesome.

Analyze past business disputes.

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A periodic retrospecive review of disputes – who they involved on both sides and what kind of transacions gave rise to them – may help your business idenify areas for improvement. For example, you may be able to idenify problems with the terms of standard contracts, poor i nternal communicaion or a failure to properly handle complaints.

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Nothing personal; it’s just business

It can be difficult for someone who has nurtured a business from the start to separate the personal from the commercial.

If you find yourself arguing about principle, back down, turn around and hand the mater off to someone else who can be objecive.

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Don’t be a jerk.

, This is really a corollary of the previous two rules.

Be honest in evaluaing your own acions because no one has the luxury of being right all the ime. Try to understand the dispute from the other side and made adjustments or amends as necessary.

If you are dealing with a genuinely impossible individual, don’t be goaded into a fight. You can choose who you do business with and in some cases, the beter choice may be to politely decline from addiional orders or jobs.

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GET THE HELP FROM US

Litigation may, in some circumstances, be a necessary evil, but where your business has the opportunity to avoid recourse to the courts, it should.

Furthermore, it can, by adopting 10 relatively simple good business practices.

If you have questions about ways to avoid litigation or how to resolve business disputes, please contact us at Owen Hodge Lawyers to schedule a consultation by calling 1 800 770 780.

1800 770 780 ohl@owenhodge.com.au

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