San Diego Business Lawyer Blog
Avoiding Litigation – Part One sets forth three pre-conflict practices useful in reducing your business’ risk of litigation. Of course, avoiding all conflict is virtually impossible. However, conflict does not inevitably lead to litigation. In fact, more than 90% of all conflict is resolved before reaching the courthouse steps. Below are three practices useful in avoiding litigation after conflict has arisen:
Act Fast. The worse thing anyone can do is ignore a potential conflict. If you receive a letter, phone call or personal visit from an unhappy customer, vendor or client, respond immediately. In most cases, the problem will not go away because you chose to ignore it. The problem will more likely get worse. Communication is a powerful tool that can diffuse even the most heated dispute. The faster you act, the more easily the problem will be to resolve. Being responsive often puts the other side off guard. They are poised for a battle and when you call to offer a solution, they’re not quite sure how to respond. If you are behind on a debt, offer a payment solution that is workable for you. Offering a payment solution you can’t ultimately adhere to is worse than ignoring the problem. If you cannot fully perform, offer creative alternatives. Whatever your response, it will be better received if it provides options. If there is disagreement about your rights and obligations under an agreement, offer to sit down and discuss the issue. Don’t be rigid. Explain your beliefs politely but be sure to leave the door open for a compromise. Conflict and anger breed more conflict and more anger. In the end, you don’t have to agree to anything. However, open and conciliatory communication opens the door to a wider range of potential resolutions. Acting fast is no less important where you are seeking redress. If you are owed a past due debt, don’t rest on your laurels. The fact that there is no doubt about the debt doesn’t guarantee payment, especially without litigation. It remains costly for you to sue. Instead, contact the debtor and ask whether there is a problem. Offer to work with them to resolve the debt as quickly and as efficiently as possible. They will appreciate your offer, and likely never forget it. If it appears your efforts at informal resolution are ignored, try asking an attorney to write the other side a letter. A litigation attorney can concisely set forth the legal realities for the other side and can usually do this at a relatively low cost. Be sure your attorney understands your commitment to resolving the matter without the need for litigation.
Be Willing To Compromise. No matter the strength of your bargaining position, litigation is expensive. For new and growing businesses, it is prohibitive. Large businesses and corporations can more readily afford a legal battle, but there is little benefit to litigating a matter that could have been informally resolved at a much lower cost to the company. Even where larger concerns are at issue such as fear of opening the floodgates to repetitive litigation, looking to a compromise may help avoid worst case scenarios. Think about the prospect of litigation. What will it cost you in terms of aggravation, time, money and goodwill? Take a hard look at the matter before you and consider alternatives that might be acceptable to you – weigh the costs of the compromise against the aggravation, time, money and goodwill you will exhaust during a court battle. These costs cannot be overstated. Compromise may be the single most important practice in avoiding litigation. It is also the hardest practice for most businesses to swallow.
Listen To Your Attorney. If you’ve consulted and/or retained a litigation attorney, even if just to send a letter, you have to believe that they have the requisite skill and knowledge to represent your interests. They are in the best position to analyze your factual circumstances, the legal issues that will impact those circumstances and your opponent’s claims. A good attorney will distill the facts and the law for you and then provide a frank and realistic assessment of the case. If you don’t believe you have a “good” attorney, find a new one before opting to ignore their advice. By accepting the realities of your case, you present a more realistic bargaining position. Your attorney will still start from a high position of course, but the knowledge that you have fair and realistic expectations gives your attorney confidence that her ultimate recourse will be respected. Confidence in the reasonableness of one’s client is a powerful tool for lawyers. The alternative is a constant battle not only with the other side but also between you and your attorney. This is a recipe for disaster – ongoing destructive litigation between the parties. It’s important to note that a frank and realistic assessment of your case doesn’t mean that you are not 100% in the right. Your attorney factors in non-emotional factors that may not be fair but are realities. This includes perceptions of potential fact finders (the judge or jury), legal issues that favor your opponent, trends in judicial attitudes about your particular scenario, the financial resources of your opponent and your resultant ability to keep up with litigation costs, potential expert opinions in your opponent’s favor and difficulties with presenting the nuances of your position. If you feel you are in the right, these factors are hard pills to swallow. Even harder to accept is the opinion of your counsel that, while you may have valid claims or defenses, you are not 100% in the right. Listen to your attorney.