There are few things worse in your business life than getting slapped with the dreaded lawsuit. Back in the day I practiced law full time, and although these days I am a “recovering attorney,” the pain and fear my clients faced when defending a lawsuit remain with me.
The fact is, lawsuits are not only, generally speaking, a bad way to resolve conflicts, they are also expensive, time-consuming, draining and frustrating. They can put you behind the eight ball, or worse, out of business, or even worse, into bankruptcy.
So how do you avoid getting sued? Here are seven ways:
1. Suck it up: Clients never liked this piece of advice much, but that doesn’t mean it was wrong. The fact is, people don’t usually like to resort to lawsuits; they are often a choice of last resort born of frustration. In many of the cases I dealt with, the expensive lawsuit could have been avoided if the alleged wrong party was a little more humble and reasonable. But once egos get involved and/or people get mad, once it gets overly emotional, the chance to settle diminishes rapidly.
So as much as you may think you are right, or at least equally in the wrong, what I suggest is that you take the long view, realize that a nasty lawsuit could drain your resources for years to come, and say you are sorry and offer to settle (if appropriate). Make the conflict go away.
In the short run you will be unhappy, and it will likely cost you more than you want, but in the long run you will be happy it is over.
2. Avoid suing: Of course sometimes lawsuits make sense, for instance, you have been damaged, someone cost you money or broke and agreement and they won’t rectify the situation. By all means, sue.
But just know this too: Once you sue someone, you open the floodgates. They can sue you back. And if they are as angry as you are, they just might. In that case, you will need to hire a lawyer, maybe notify your insurance carrier, deal with discovery, get deposed, etc. If you don’t sue though, it probably does not get that far.
3. Be reasonable: Here, I am talking about reasonableness in the legal sense. Often (not always of course) when a business is sued, the allegation is that they were negligent in some manner. Essentially, negligence means you did not act as a reasonable person would in the same or similar circumstances.
So be reasonable. Be cautious. Double check. Follow standards and rules. Be prompt.
4. Keep your word: As an adjunct to #3, it would similarly behoove you to live up to all of your agreements and not breach them. Aside from negligence suits, breach of contract suits are the most common in business. Even if the contract is difficult to live up to, breaching is rarely the proper solution.
5. Institute policies and procedures: Sometimes, policies and procedures seem like things more suited to bigger businesses. But the fact is, policies and procedures have very specific, important purposes that are equally applicable to almost any small business:
· They explain to your staff what it is you expect of them
· It helps them do their job appropriately
· They are evidence of your reasonableness
So build your reasonable way of doing business into your office policies, and then make sure people follow these rules.
6. Be a mensch: Be a mensch to your employees. Be a mensch to your customers. Be a mensch to your suppliers. People rarely sue menches.
7. Get insurance: A comprehensive general liability (CGL) insurance policy won’t prevent you from being sued of course, but in many circumstances, not only will it pay for the cost of a lawyer if you do get sued, it will pay any damages you may have to pay. If you ever are sued, you will be glad you had it.
Final caveat: Of course I need to say that you need to speak with your own lawyer in any specific circumstance – I don’t want to get sued either!