One of the most important matters entrepreneurs must be cognizant of is litigation avoidance. Whether or not your business is vulnerable is a matter of knowing, not hoping. We live in a litigious society, so it isn’t a matter of if, but when you may come under the scrutiny of the legal system. Regardless of winning or not, the process is both painful and expensive. Legal avoidance for entrepreneurs is something that most hope is not an issue, so they leave it on the back burner while trying to grow their enterprises. Here are some litigation avoidance strategies that may keep you out of court, or at least prepare you for minimizing a legal action.
- Employment Law
- Electronic Storage of Information
- Intellectual Property
- Contracts Management
- Conflict Resolution
- Arbitration and Mediation
Employment Law is a prime area for potential litigation, and therefore, as a business owner, you need to ensure that you are aware and complying with local, state and federal employment laws for litigation avoidance. Some of the mainstays for employment lawyers happen to be wrongful termination, sexual harassment (which is a very sensitive and complex issue), wage and hour disputes (the least of your potential worries) and employment discrimination (hiring and firing). The business owner must be aware of numerous laws that are both restrictive and can be extremely punitive.
Fraud is one of those issues that best comes to light when too much freedom is given to the ones handling the books. Another perspective on this topic is not paying enough attention to accounts receivable, accounts payable and the bank balance. All too often an entrepreneur will leave the accounting completely to a hired person rather than a certified and insured accounting professional. There are a great many ways to identify and prevent fraud within the organization by following an in depth checklist, and auditing it often. Employees may unknowingly misrepresent your company to a potential customer, therefore placing you in a precarious position. It may not be considered fraud if the action is unintentional, but a disgruntled employee may perform a fraudulent act whimsically. Litigation avoidance is a full time job.
Electronically Stored Information, as mentioned in a previous article, the uses of an automated document retention system along with a written policy to its proper use. Today’s business owners must be aware of the potential liability of legal actions, suits and government auditing that can go awry because the proper documents can not be accessed in a timely manner. As more and more businesses become digitized, the proper software systems are necessary to ensure that all documents created within their organization are kept in an organized, detailed digital system for easy recovery. Items such as time records, applications, disciplinary actions, policy and procedure manuals and so on. The list is exhaustive once you consider this issue in depth. Digital information is easily corrupted and therefore strict adherence to policies designed to protect the integrity of the systems are necessary. Digitally stored information is also cost effective, productive and green.
Part Two will continue to explore the factors not yet covered, specifically, Intellectual Property, Contracts Management and Conflict Resolution. Stay tuned!
NOTE: This article is for information purposes only. Nothing contained herein may be considered legal advice or counsel of any kind. Should you need legal advice on anything contained in this article, please consult a qualified attorney.