Litigation Avoidance for Entrepreneurs- Part Two of Two

Last time we managed to discuss some of the potential litigation hot spots in business, such as:

• Employment Law
• Fraud
• Electronic Storage of Information

This two-part article would not be complete without discussing the remaining topics, which are:

• Intellectual Property
• Contracts Management
• Conflict Resolution
• Arbitration and Mediation

Remember, it continues to be an area that deserves much attention, yet as budding entrepreneurs and emerging enterprises often learn (to their chagrin), it is often neglected or ignored.  Don’t become a victim; be like the Boy Scouts, always prepared.

Intellectual Property happens to be a very hot topic these days. As the digital age has everyone creating content for use in marketing and advertising, creation of technical papers, patents, trademarks, copyrights and the lot.

There are two distinct ways to look at this topic as potential litigation avoidance tactics: one to ensure that no one is failing to follow the strict procedures you have aligned to prevent the misuse of corporate trade secrets, formulas, procedures. The other is to ensure that you and/or your employees acting on your behalf are not infringing on someone’s intellectual property.  The use of an intellectual property attorney in the development of an internal audit program can eliminate problems prior to them coming to the surface unknowingly.

Contracts Management. Growing a business typically requires contracts for a variety of reasons.  These contracts may be for hiring subcontractors, leasing office space and equipment, employment contracts and a plethora of other uses. These executed contracts place you as the business owner into a position of accountability. Sometimes contracts require personal guarantees, collateral or a combination of both.  Should those responsible for the maintenance of said contracts; their handling does not placate your potential liability.  Defaulting on any contract can have serious repercussions.

Conflict Resolution.  Invariably businesses become involved with conflict. Whether it is customer dissatisfaction, vendor complaints, and internal employee conflicts like sexual harassment complaints, discrimination, or whether it be some conflict out of the blue. By stating a company’s position in writing that they agree to act responsibly and professionally toward any conflict, does not necessarily claim that they are not automatically “right or wrong.” What it does allow the business to go on record is that every possible action may be performed to intentionally settle a dispute rather than litigation. Such a statement in contracts, policies, procedural documents and advertising and marketing brochures let the world know that you are concerned with the welfare of your customers, employees and those with whom you do business.

Arbitration and Mediation are two forms of formalized conflict resolution, once every stone is turned in the litigation avoidance stratagem. A form of alternative dispute resolution, arbitration can be binding or non-binding.  Two or more parties agree to have their dispute reviewed by attorneys outside of the court system, and have the ability to plead their side of the dispute.  The outcome therefore comes from a disinterested party, and each side has the potential of paying the legal fees should they lose. Mediation, on the other hand, is a system outside the courts whereby a mediator attempts to find a middle-ground solution to the dispute, hopefully so that all parties find satisfaction in the outcome.  There are legal fees in this manner as well, however minimal compared to binding arbitration or court decisions.

Conclusion.  Regardless of which facet of business under scrutiny, the cost of litigation can be overwhelming.  America tends to be somewhat “sue thy neighbor” in thinking, and therefore every effort should be made to avoid litigation at any cost.  It is far better to give a product or service away rather than face a lawsuit.  Operating at a small loss on a particular transaction is far less expensive than litigation at any level.

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.