Litigation can have a devastating effect on productivity and profitability for a company. Between attorney fees, court costs and expert witnesses, even simple disputes can quickly cost a staggering amount of money. Taking time to meet with company lawyers to explain the facts leading to a dispute, evaluate options and plan litigation strategy is only the beginning. Once a lawsuit is filed, months and even years of depositions, hearings, investigation, document review and management are followed by a stressful trial and verdict.
Aside from the financial and productivity costs, the final verdict could be crippling to a company depending on what is at stake. Taking active steps to reduce or avoid litigation altogether should be part of every company’s business plan.
Here are three tips that can help a company reduce or avoid litigation.
- Exceptional service. Happy customers, vendors and business partners don’t sue companies. Where a customer or business partner has the ability to contact a company and resolve an issue, litigation rarely occurs. Companies that actively communicate with customers, vendors and business partners to address issues are less likely to find themselves in litigation. This means having trained customer service personnel available to timely help customers and vendors resolve issues.
Sales representatives should know their customers and vendors and develop relationships with them to set expectations properly and to avoid disputes before they happen. If a customer or a vendor knows they are being heard, they are more likely to resolve an issue and less likely to hire a lawyer. When a customer or a vendor has a dispute, ignoring the problem or delaying it rarely avoids litigation. Address the issue head-on before it escalates. - Proper contract documents. Many businesses cut corners trying to save costs or relationships by not having proper business relationship documents prepared. Inadequate, vague or incomplete documentation often leads to uncertainty and ultimately to litigation.
Take the time to have a lawyer properly prepare your contracts and purchase and sale documents before you enter into the client relationship. Spending a little money to have an attorney draft an agreement up front can save tens of thousands of dollars in litigation costs if a dispute arises. Make sure that the terms are complete and clear and that they limit your legal liability.
Then, when you send a contract document to a customer or a vendor, make sure that it is accepted and keep copies of signed agreements and related materials in your company records. A great document is of no use when a dispute arises if you cannot locate your customer’s assent to the terms. Having a clear, written agreement is key to avoiding litigation because all parties know what to expect from the relationship and what happens if something goes wrong. It is the uncertainty that usually drives litigation. - Picking the right attorney. When a dispute arises, having the right attorney can be the difference between a quick resolution and an expensive, bet-the-company litigation.
An experienced attorney will first help you determine what your goals are and will design a strategy to meet your goals without resorting to litigation. Your attorney should be able to evaluate the merits of your position in the dispute, advise you of both your strengths and weaknesses, and approach the other party to the dispute in a way that demonstrates a willingness to resolve the dispute without litigation, but to also show the ability to successfully litigate the issue if necessary. The delicate combination is key to resolving a case without litigation.
Appropriate steps should be taken to avoid disputes such as focusing resources on exceptional customer relations and ensuring that clear contracts exist with customers and vendors. When a dispute arises, hire an attorney with the right balance between the ability to quickly resolve a dispute and having the strength to litigate it if necessary.
Mark A. Romance is a shareholder in the Miami office of Florida law firm Richman Greer, where he focuses his practice on commercial and complex litigation. He has significant experience in contract litigation, real estate, employment, product defect, non-compete, trade secret, intellectual property, and estate and trust litigation. He may be reached at [email protected]
