Business litigation is expensive, pure and simple. It is costly both in terms of time and money and should be avoided where possible. Even a favorable settlement could take months – if not years – to complete. In that time, you’re likely to lose productivity, value, and income. It’s sometimes not worth it. To avoid the cost of litigation, we recommend taking proactive and preventative steps. The more prepared you are, the more likely you’ll handle the situation positively.
First and foremost, you can do your best to avoid litigation altogether:
- Do not skimp on contracts. Instead of spending on legal fees during a lawsuit, making a smaller investment by writing a substantial contract and obtaining agreements up front.
- Audit your policies. Ensure you have coverage for your business. Consult an attorney to decipher your insurance policies to ensure you have the right type of insurance and the proper amount of coverage.
- Keep all records. Producing key documents can thwart business litigation, saving you money in the future.
- Be proactive. A small dispute may quickly turn into a significant lawsuit. Deal with any minor conflicts early on to avoid a court case.
Don’t Be Sloppy
If you’ve become accustomed to dealing with someone on a daily basis, it’s easy to become complacent and let your guard down. However, a smart businessperson will always have protection. For example, if you’re working with a contractor – the same one for a few years – and they’ve never failed to pay, still send the required Notice to Owner, which ensures your lien rights are protected.
For goods, do not pay purchase price without requiring the whole sum paid be placed into escrow, even if you’ve worked with your supplier on countless occasions.
Also published on Medium.