San Diego Business Lawyer Blog

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.  

Get 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.

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.

Today, 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.