It is no secret that litigation is an expensive way to resolve business disputes.  Not only are court costs high and attorney’s fees steep, but lawsuits take your focus away from running your business for significant stretches of time.  In order to help avoid the cost and stress of litigation, follow the tips below:

Enter into Effective and Enforceable Contracts

Each and every business relationship should be memorialized in a written contract.  This includes but is not limited to: agreements between owners, agreements with clients and customers, agreements with employees, agreements with vendors, and agreements with anyone who will have access to confidential business information.  Such contracts should be drafted in a customized way to govern the specific relationship at hand and should clearly spell out the rights and obligations of each party.  While it is tempting to simply copy and paste a contract from an Internet search, it is a much smarter practice to retain an attorney to help craft the contracts in order to avoid or at least minimize disagreements down the road.  A few hundred dollars in drafting fees only seems like a lot of money until you are forced to pay thousands of dollars to litigate disputes over a poorly drafted contract.

Obtain Appropriate Insurance Coverage

Insurance is a necessity in today’s business world.  Thus, it is critical to fully understand all of the risks of your business to ensure that the company has insurance policies to adequately cover those risks.  Failure to have the proper insurance can prolong the case and subject the company to financial stresses it would not otherwise have to face.  The most common types of insurance to consider are: general liability insurance, commercial property insurance, professional liability insurance, product liability insurance, and workers’ compensation insurance.

Properly Train and Supervise Employees

When employees are performing within the scope of their job responsibilities, they are an extension of the company.  This includes both time spent in the office and time spent running errands benefiting the company.  Any wrongdoing by an employee while on the job is likely to be attributed to the company.  Therefore, it is vital to ensure all staff members are fully trained on their respective job responsibilities and expectations, understand the company’s policies and procedures, and know that such policies and procedures will be strictly enforced.  In addition, providing employees warnings and/or discipline for violating company policy will go a long way toward stopping risky conduct in the future.

Keep Records

Often, disputes arise due to mistaken impressions or misunderstandings.  In such cases, the practice of maintaining relevant records to clear up a misunderstanding can be the end of a conflict.  Failure to keep such records can quickly turn the dispute into a game of “he said, she said.”  Records to retain should not only include contracts but also notes of any substantive communications surrounding the contracts.  For employees, keep track of employees’ time, complaints, discipline, and reviews.  Doing so will allow you to quickly establish your position in the event of any employment-related issues, and will serve as a strong deterrent for employee-side attorneys to pursue a case against your company.

Be Mindful of Rising Conflicts

Paying attention to minor conflicts can be a powerful tool in preventing the conflict from escalating into a large conflict which is more likely to result in litigation.  If you think that an employee, client, or vendor you have worked with is unhappy, address the situation head-on and try to find a solution that is mutually advantageous.  Negotiating early on can keep the dispute from boiling over into something larger (and more expensive).  If it cannot be resolved, at least the channels of communication are open and avenues of resolution can be explored prior to initiating litigation.

The attorneys at Navigato & Battin strive to ensure that our business clients have protections in place to put them in the best position to avoid conflicts.  Spending the time, money, and effort to do things right the first time around will save you significant time, money, and effort down the road.  Many businesses learn this the hard way, and do not shape up their practices until they have been hit with a big lawsuit and are forced to write several months of checks to their attorneys.  Learn from their mistakes by proactively ensuring that your company’s business relationships and recordkeeping procedures put your company in the best possible place before a problem arises.