Last month, I had the opportunity to chat with some phenomenal business women at NAWBO’s (National Association of Women Business Owners) quarterly luncheon. I remember one conversation in particular where a business owner and I discussed the types of litigation matters I could handle for her small business. What we did NOT discuss, however, was how she, as a small business owner, could try to avoid litigation. Litigation can be a small business owner’s worst nightmare. It can tarnish the reputation of the business in the community. It is also costly and time-consuming. While all litigation cannot be avoided, businesses can employ good practices to mitigate the risk of being sued by their employees and clients. Below are some helpful tips and reminders for small businesses to reduce the chance of being sued.
- Dot Your I’s and Cross Your T’s … IN WRITING! It sounds like common sense, right? Small business owners have to focus on as many tasks as large corporations without the same amount of resources. Because of this responsibility, small business owners tend to overlook the importance of certain formalities, such as creating written contracts and requiring all parties to the contract to sign on the dotted line. It is true that an agreement does not necessarily have to be in writing to form a contract. But, having a written agreement can certainly save a business owner the headache of dealing with lengthy and expensive litigation. A writing that clearly sets out the terms, conditions and responsibilities of the parties can deter someone from suing the business. If the person moves forward with filing a lawsuit based upon an issue that is covered in the contract (many business disputes involve some contractual issue), having the contract in writing can lessen the amount of time that is spent defending the lawsuit. And, in some instances, the writing can serve as a basis for the business’s attorney to file a motion to dismiss the lawsuit and therefore, save the business owner thousands of dollars in legal fees and expenses. Also, for the reasons stated above, it is equally important that any oral conversations or disputes regarding an issue are followed up in writing and sent to the parties involved. This documentation will confirm that the parties are on the same page and can also discourage litigation.
- Be Proactive, Not Reactive. Always keep an eye and ear out for any potential issues that you think may result in having a lawsuit filed against your business. As soon as you have that concern, you should contact a lawyer immediately to discuss your options and to get advice in hopes of avoiding litigation. Don’t wait until the lawsuit has been filed before contacting your attorney. Yes, it will cost you for this legal advice, but it will cost you more if you wait until the dispute is in litigation.
- Lastly, always remember that “you can catch more flies with honey …” You may not think about this often, but you are more likely to get your way with flattery than with demands. If a business owner is confronted by a disgruntled employee or client, it does not behoove the owner to respond aggressively. Instead, the owner should express interest in resolving the dispute or concern amicably. While this is not a surefire way to avoid all litigation, people are less likely to file a lawsuit against the business if they feel like they are being treated fairly and with kindness.