September 2009 Archives

September 24, 2009

Avoiding Litigation - Part One

Litigation!  The word has many connotations, most of which are pejorative.  The "litigation happy" label is ubiquitous.  In the business world, "litigation" has a much more pragmatic import.  It remains a useful tool for San Diego business seeking legitimate recourse but simultaneously is the source of unease.  While a full proof method of avoiding litigation may be impossible, there are six simple practices businesses of all sizes can follow to reduce the risk of litigation.  The first three pre-conflict practices are set forth below.  The remaining three post-conflict practices are set forth in Avoiding Litigation - Part Two of this article.  

872361_clouds_in_contrast.jpgGet It In Writing.  Ideally a contract attorney will assist with the drafting and negotiation of all contracts.  However, this may not be practical for many businesses, especially for new and growing businesses or those that routinely contract with vendors and customers.  If an attorney is cost prohibitive, drafting basic instruments yourself to memorialize your agreements is a pragmatic alternative.  The internet provides a wealth of helpful instruction, sample contracts and anecdotal information from other business owners.  The paramount concern is mutual understanding.  Although you may not recognize all the legal complexities of contracting, a writing that memorializes your agreement at the very least reminds each side of the representations made.  Be sure that everything discussed orally is in writing.  Don't take anything for granted.  If the person you are contracting with is resistant to a detailed agreement, there is reason for concern (see "Use Common Sense" below).  Faced with a written agreement, even the most difficult of parties will often concede critical points.  Getting it in writing without the assistance of an attorney can be a pragmatic alternative which is better than no writing at all.  However, consultation with a contract attorney remains the best way to ensure that an enforceable contract is in place to protect your business' interests.  

Use Common Sense.  Learn to recognize repeat problem areas either with customers or vendors.  If a vendor is repeatedly late with deliveries or a customer owes you money or either is constantly complaining, it's generally a sign that those types of problems will continue.  Don't ignore obvious perils.  When your gut tells you something is fishy, it's probably not worth the frustration to go forward no matter how appealing a customer's business or how economical a vendor's products or services may be.  These are the folks that are more likely to create conflict with you and others.  If you offer a service or invite customers into your place of business, don't be oblivious to hazards.  No matter how busy you are, immediately address anything that might cause even the slightest mishap.  There is no substitute for common sense.  There is no rule book for you to follow.  Your job is to be aware.    

Treat Everyone With Respect.  This is difficult for some people.  Entrepreneurs and successful business men and women are generally driven focused people with a clear vision.  They are intelligent, savvy and direct with little patience for distraction, excuse or delay.  Unfortunately, this personality trait is not always conducive to building strong enduring relationships.  Your customers, vendors and clients are part of a diverse population comprising varying degrees of motivation, intellect, knowledge and patience.  Some communicate better than others, and some are simply nicer than others.  They all have one thing in common - they consider the deal between you and them to be very important.  Whatever the personality trait, treating even the most difficult people with respect reduces the likelihood that they will go back to their office or home complaining about how they were treated.  This in turn reduces the likelihood of conflict.  It's the difficult people that will most likely lead to conflict, so for this very reason they are the ones you should be most careful with.  In colloquial terms, "suck it up".  Stay polite and considerate, and be apologetic (not apathetic) when you cannot accommodate them.  It won't cure every potential conflict, but it will reduce their occurrence.  If you think you are incapable of this type of patience, insulate yourself using management and staff who have these skills.  The ultimate reward is the goodwill respect garners over time - a priceless commodity for your business.  

These seemingly obvious rules are too often overlooked.  A little common sense and respect go a long way even for the largest corporations.  And don't forget - get it in writing.  Avoiding Litigation - Part Two sets forth the three post-conflict practices that are conducive to reducing your business' risk of litigation.
September 15, 2009

Managing Business Litigation Costs

Most San Diego businesses, regardless of their size, try not to think about the potential for litigation.  They cross their fingers and move forward concentrating on day to day operations and marketing.  They are aware of possible contract disputes and potential liabilities but put their faith in the good nature of their customers, clients and business associates.  The prospect of litigation scares them and for good reason.  Past experience has taught them that anything involving an attorney is excessively expensive, and inevitably leaves them feeling frustrated and dissatisfied.  Attorneys have proven unresponsive to their needs, difficult to communicate with and often apathetic leaving them with little confidence that they are being billed fairly or that their case is being handled economically.  Instead, they walk away believing, without really understanding why, that attorney hours and costs are inflated and that their case has probably been drawn out longer than necessary with little or no effort towards early resolution.

Billable 2.jpgToday, skyrocketing legal costs have even the largest corporate executives second guessing themselves.  While the billable hour has been under attack as of late, it is still pervasive.  This is because in a large number of scenarios it seems the only practical way to bill clients for attorney time.  Yet the practice is fraught with inefficiencies and disincentives (see our article on the "billable hour" setting forth just some of the reasons why this is so).  The solution for those faced with the inevitable hourly billing that comes with litigation is twofold.  First, a frank and open discussion with your attorney about the firm's billing practices (including how costs are incurred) minimizes any misunderstandings and ensures that your expectations are realistic.  If a law firm is resistant to this type of discussion, it's a clue that the firm is likely wedded to the "billable hour" freight train.  This article distinguishes between the typical "billable hour" mentality and a litigation attorney's practical need to charge by the hour.  The former is part of a firm culture that rates attorney performance by the number of hours billed while the later looks to client satisfaction.  Second, once a clear understanding regarding billing is reached, monitor your attorney's bills with close scrutiny.  While it is almost impossible to recognize every inefficiency, close scrutiny of billing provides a general impression that is valuable to you as the client.  This includes looking at costs.  Your law firm will recognize your attentiveness, and will be forced to pay better attention to attorney hours and costs incurred (i.e. consider reducing attorney hours charged for a new associate's work on a motion that could have been finished faster by a more experienced lawyer or consider three or four star accommodations the next time they travel for a deposition).

This may be second nature to smaller businesses concerned with escalating legal costs.  It should be of greater concern to larger businesses and corporations who seem to accept skyrocketing legal costs as the cost of doing business.   Businesses of all sizes should not be afraid to put their current law firm on notice that it expects efficient and cost effective representation.  Nor should they be afraid to take their business elsewhere should closer scrutiny of billing evidence a pattern of inefficiencies and excessive costs.  Your power rests in your ability to hire another litigation firm if you are unsatisfied.
September 10, 2009

New and Growing San Diego Businesses - Hiring Employees Part Three

Parts One and Two of this article focused on the factors new and growing San Diego businesses weigh when considering whether or not to hire their first employees. Part Three focuses on the important task of developing an employee policy. Regardless of the stage any San Diego business finds itself in, ensuring that new and existing employees understand what is expected of them in any given situation is critical for effective management. A clear and unambiguous employee policy minimizes costly miscommunication and conflict between employees, management, vendors and customers.

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Some argue that companies could or even should wait until the second or third employee before developing a written policy because new and growing businesses have other priorities and little time to spend on a formal employee handbook. This is a pragmatic view which undoubtedly appeals to many entrepreneurs. However, forward looking businesses will draft some sort of written employee policy for its very first employee.

Whether a handout a few pages long or a detailed handbook prepared by attorneys and a fully staffed human resource department, a good employee policy will contain a number of important features: it will be written in clear and unambiguous language (preferably at a 5th grade reading level with each policy set forth on a separate page); it will address key employment issues such as health, safety and other government regulations (State and Federal), employee theft, and company expectations regarding performance and conduct; it will address anticipated problem areas such as internet use, outside email contact, phone procedures, customer contact and media contact; it will set forth a disciplinary policy; it will hold all employees to the same standards; and lastly but by no means any less important, it will highlight company benefits and quality of life. Businesses should avoid a tedious written policy that creates an impression that the company will be stuffy and unyielding. The employee policy should articulate standards prospective employees can understand while simultaneously stressing the company's appealing attributes.

Continue reading "New and Growing San Diego Businesses - Hiring Employees Part Three" »

September 2, 2009

The Internet Plays Important Customer Service Role for San Diego Business

In today's climate, San Diego businesses are loath to suffer any negative publicity.  Instead, they are looking for an edge wherever they can find it.  Whether businesses know it or not, the internet is filling an important customer service role.  Websites like Yelp.com and Amazon.com provide actual consumer reviews on a wide range of products and local services.  More and more, the average consumer turns to the internet first for information and first hand customer insight.  Whether looking for a car wash or an San Diego attorney, review sites on the internet are a powerful tool allowing consumers to look inside a company's windows before trying out its goods or services.  For instance, a modern consumer with car trouble today might do a search on Yelp.com for a trustworthy automotive repair shop in San Diego County.  He or she would find out rather quickly that Advantec Auto Repair comes highly recommended (reviewed by 98 customers with a perfect rating of 5 Stars out of 5 Stars by all 98 customers).  This is precisely the confidence builder that the savvy consumer is looking for before trusting their car to a mechanic.
 
Customer Service_827556_sign.jpgIf your business provides a service in San Diego, odds are there are already some reviews on Yelp.  You may be surprised (pleasantly or to your consternation) at what people have to say.  Either way, internet review sites are here to stay and managing this new facet of customer service must be part of any business' marketing arsenal.  "Managing" does not mean you get to go in and change the reviews.  It does mean that you will have to pay closer attention to customer service and customer satisfaction.  No business can afford to ignore negative publicity, especially during a recession.  If reviews are negative even in the slightest, a business owner needs to act immediately to cure whatever deficiencies might exist including making necessary changes to how he or she does business.  It's true that some reviews may be vindictive and unwarranted.  In such cases, business owners are allowed to post their own response.  However, this is a good idea only in unique cases because it most often appears defensive and disingenuous.  The better solution to an unwarranted negative review is to work toward an increase in the number of positive reviews which in turn increases the business' overall average rating on Yelp.  One negative review against 75 positive reviews carries little weight.  Encourage your customers to share pleasant experiences with others on Yelp.  

While restaurants, products and retailers remain the most critiqued of all categories, it is only a matter of time before every business is under the internet microscope, including doctors, lawyers, banks, investment companies, real estate agents, dentists, cell phone companies and individual professionals.  Go on line today and see what people are saying about your business.  If you don't find your company on Yelp, add your business.  This allows you to provide accurate information about your location, phone number, website, pricing and other facts such as whether you accept credit cards.  By adding an inbound link to your website, it also has a positive impact on your site's optimization.