Avoiding exposure to business litigation

March 24, 2017

True or false: The value of a business litigation attorney is whether they can keep you out of being sued and going to court. Any business owner who has been through the trenches of litigation and the disruption it can cause to business will most likely answer, true. While many people think of great business litigation lawyers as those who win in court, the valuable counsel are the ones who diligently work to prevent lawsuits with good advice and planning. Even though it is true that anyone can file a lawsuit, regardless of whether it will be dismissed, most established businesses do not file frivolous lawsuits and settling disputes outside of court is often the best course for everyone involved. Especially when your business is funded by investors and shareholders, as officers and directors, there is a duty to produce profits, not lawsuits. The following are elements of a good business plan focused on avoiding unnecessary litigation.

  1. Turning away deals with those who may not be worth the risk.

In many business deals, there are people selling something to customers and others on the side of producing goods and services. If the salespeople make promises the others cannot keep, there can be problems. Negotiation deals really can be an art and with experience dealmakers can sense when things are not adding up right and a deal is lopsided. While some deals produce quick returns and large profits, it may be wise to balance the risk of loss with steady and reliable business. Measuring risk is likely one of the most difficult processes, next to pricing and what to do with competition.

  1. Writing concise agreements that stand up to challenges.

Agreements among parties are only as good as their enforceability should they contract be challenged. Plain English is very important because many non-lawyers need to be able to clearly understand the contract terms and provisions for violations and failure to perform the terms of the agreement. Well-written agreements may include liquidated damages clauses and insurance-backed indemnification. The objective should be reducing uncertainty so everyone who signs off on a contract knows exactly what to expect and precisely what will happen if parties to the agreement fail to perform their duties.

  1. Keeping up with the speed of competitive business environments.

Technology is a tool and when it is used effectively it can lead to advantages in business. On the other hand, when we fail to account for the risks and pitfalls in business technology, we expose ourselves to risk. Protecting our brands, websites, marketing collateral and efforts at building good will in the marketplace requires an understanding of intellectual property as well as electronic commerce. Protecting trademarks and patents from infringers is something that should be done as a regular preventative practice. As well, websites used in business commerce may be measured to current industry standards and falling short can move your business out of the front of the competitive pack.

  1. Recordkeeping and redundant backup policies.

Disagreements lead to litigation. Avoiding dispute with accurately kept records can help keep a business conflict out of court. Recordkeeping is very important and anything that happens in business that could lead to a dispute, should be able to be addressed with documentation. Imagine that any one business deal may need to be defended long after the parties are available. In this case, the documents of what happened may be the sole source of the story of what happened. Keeping good records also means keeping copies in separate locations and on paper because technology can fail.

  1. Business continuity and disaster recovery planning.

What happens if your widget production plant is hit by a tornado, flood, active shooter or terror attack? How will you be able to make contracted deliveries on time? Can you sustain if your plant is closed for a day, a week or longer? Will your insurance underwriter bail you out? In today’s complex business environment where disaster recovery is a focus, not having a recovery and continuity plan can be a block to certain business deals. With a plan in place your business operation you may be a potential recipient of third party aid in extreme situations. At the end of the day, avoiding being sued for contract non-compliance should be preventable.

For more information about business planning to avoid exposure to litigation, please contact The Michael Kim Law Firm, PLLC.

About us: The Michael Kim Law Firm, PLLC, in Dallas, Texas, is a full-service business transaction and litigation law firm of experienced attorneys serving the Dallas-Fort Worth Metroplex.

The Michael Kim Law Firm, PLLC, represents individual clients and organizations with business and commercial law needs. The firm also represents both plaintiffs and defendants in general civil litigation, injury, property, employment and consumer matters.

To speak to an attorney please dial (214) 357-7533. Additional information about our attorneys and practice areas is available on our website.

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