8 Proactive Steps for Avoiding Litigation
Read time: 4-5 minutes
How To Try And Avoid Litigation: Litigation can be a necessary and useful tool for businesses to reach an objective. It can assist in resolving disputes where the parties have reached a standstill, or if the relationship is too damaged for effective resolution discussions.
Quick and easy litigation is practically unheard of. Litigation is usually expensive, stressful, and time consuming. Litigation can also lead to strained business or personal relationships. It is important to think about the cost-benefit analysis before initiating litigation proceedings and to think about alternative ways that you might be able to resolve a dispute.
While it is sometimes necessary, litigation can often be avoided by implementing these proactive steps into your regular business routine:
1. Effective Communication
Developing effective methods of communication is essential for any successful business relationship. Disputes often arise because two parties are not on the same page. Using a respectful tone, communicating clearly and communicating in a timely manner can ensure that all parties have a clear understanding of any business arrangement. Once a dispute develops, effective communication skills can be used to resolve the dispute before litigation is commenced. Listening to the other side and understanding what they want can assist in efficient resolution discussions.
2. Building Positive Relationships
Investing the time and energy to build positive business relationships is beneficial for avoiding litigation. Relationships built on respect and trust will be more likely to resolve disputes through an alternative method such as mediation or negotiation. It will be easier to communicate with each other in order to reach a mutually beneficial resolution. Effective communication, honesty and respect are key to building positive business relationships.
3. Use Written Contracts
While it can seem convenient to create an oral contract with a business partner, client, employee or supplier, a well drafted written contract can assist in building positive business relationships. A written agreement mitigates the chance of a misunderstanding developing between the parties. Written agreements provide more security in the event that one of the parties reneges on their contractual obligations. Without a written agreement in place, trying to resolve the dispute, inside or outside of the courtroom, will likely be more challenging and involve a lot of he-said-she-said disagreements. Additionally, a written contract can include provisions that dictate what will happen in the event of a breach of contract and may include mandatory mediation or arbitration, as opposed to litigation. Instead of trusting that the other party will follow through with their contractual obligation on good faith, invest the time and resources to develop a well-drafted business contract at the inception of each business relationship. This will help save money down the road.
4. Dealing with Mistakes
Human error is often unavoidable while running a business. It can be easy to miss an important deadline, to order or deliver the wrong product, or mis-communicate something to a business partner or client. Dealing with mistakes quickly and effectively, as opposed to ignoring them or passing off the blame, can prevent a mistake from turning into a lawsuit.
Upon discovery of a mistake there are a few steps that can be taken to avoid escalating the problem, such as seeking legal advice, communicating with the other party, or putting a plan in place to fix the problem.
A business may be interested in fixing a mistake without admitting wrongdoing to the other side, to avoid making the business vulnerable to legal repercussions. Seeking legal advice may assist in reaching this goal.
Sometimes the problem can be fixed by simply communicating the error to the other party, advising the other party of how the problem is going to be fixed and putting a plan in place to avoid repeating the error. It is often less costly in the long run to incur an extra cost, such as reimbursing a client, to fix the problem immediately rather than allowing the situation to escalate and potentially facing a lawsuit.
5. Keep Emotions Out of the Equation
It is important to maintain a level head and to try to keep emotions out of the equation when considering litigation. Retaliation or punishment should not be a motivation to pursue litigation, even if the other side is not being rational about the situation.
This can be done by prioritizing the key objectives and keeping these objectives in mind throughout all attempts to resolve a dispute. Consider the situation from the other side’s perspective and avoid discussing the dispute when emotions are heated. Seeking the assistance of a lawyer to assist with negotiation discussions can avoid heated disputes between parties.
6. Avoid Threatening to Sue
Threatening to sue is a much-used scare tactic, however it is not usually effective in eliciting the desired results. If anything, this tactic does more harm than good. It can cause hostility between the parties, making it harder to settle the dispute without turning to litigation.
7. Consider Alternative Dispute Resolution Methods
Alternative dispute resolution methods such as negotiation, mediation or arbitration can be used to reach quick, cost-effective and meaningful resolutions. All of these methods involve collaboration from both parties to develop a resolution that finds some middle ground and is unique to the problem. This can be more meaningful than the court process where there is only one winner. As a result, alternative dispute resolution methods also assist in maintaining positive business relationships.
8. Seek Legal Advice Early
Seeking the advice of a lawyer early on can help to avoid litigation before the situation escalates and a lot of money is spent on a litigation battle. Having a lawyer review or draft business contracts can ensure that the contract is drafted clearly and that you understand the particulars of the agreement before signing it. Getting a lawyer’s assistance with settlement negotiations, mediation or arbitration can help to reach an efficient and meaningful resolution and can lead to significant financial savings. If you want to avoid litigation, look for a lawyer who is experienced with resolving disputes before they get to the courtroom, rather than looking for the best litigator.
Please contact Michael Paiva for more information about avoiding litigation, or if you require assistance with the resolution of a potential ongoing dispute.
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