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A Dozen Ways to Stay Out of Court (Part 1)

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Fred S. Steingold |

ANN ARBOR, Mich. — Trials look like fun on TV and in the movies, but don’t believe it. It’s one thing to be an unaffected spectator, but quite another to be an active participant in a legal battle.

For one thing, juries are unpredictable. If your dry cleaning business gets sued, it may be socked with a huge verdict. In addition, because of the time, energy and money it takes to defend a case, even if you win, you lose.

And plaintiffs often fare as badly as defendants. Either side in a lawsuit can look forward to long sessions in a lawyer’s office. Pre-trial discovery—the process that lawyers use to learn about the opponent’s case—will gobble up additional hours, and you’ll probably need to answer lengthy written questions and be cross-examined at a deposition.

Even if the case gets settled before trial, your bank account will feel the strain. Perhaps worst of all, you’ll be surprisingly distracted from your normal business duties.

It's smart to stay out of court. True, it's not possible to avoid all lawsuits. But with a bit of planning, your business can come close. Here are Points 1 through 6 in a 12-point strategy that can help.

1. WATCH WHAT YOU SAY

If you make negative statements about an employee or customer, you can be sued for libel or slander, or even invasion of privacy or intentional infliction of mental distress. If you badmouth another business, you can be sued for defamation or interference with business relationships.

Words have consequences. Before you speak ill of someone, be certain you have facts to back you up—and a good reason for passing along the bad news. When in doubt, clam up.

2. PUT IT IN WRITING

Business deals often wind up in court because parties proceeded on only a handshake. It’s far better to summarize your deal in a written contract or letter so everyone is clear about the terms.

This can help even if you and the other party know each other well and trust one another. People who act in good faith can still have poor memories. The task of writing down an agreement forces both people to think through the issues and to resolve differences before they become a problem. Don’t assume that you and the other person see things the same way.

3. DO A SAFETY CHECK

Lawsuits by people who have been injured at someone’s store, office or workshop are common. Even if you have a ton of insurance, you shouldn’t ignore hazardous conditions. The insurance will pay the injured person’s claim—up to the policy limits—but won’t compensate you for your time and effort in helping defend against the claim.

Check periodically for dangers in your dry cleaning business. Visitors can slip and fall on a wet floor or trip over a cord. Poor lighting can increase the risk of an injury. Your insurance company can recommend a safety checklist for your business.

4. READ THE LEASE

Make sure all the terms are clear before you sign it.

You don’t want to litigate with your landlord about whether you can expand your product line or the services you offer. And questions about the rental rate if you renew your lease, or who pays for replacing the boiler, should be ironed out in the lease—not in a courtroom.

5. USE CARE IN COLLECTING DEBTS

Laws protecting consumers contain pitfalls for the unwary business. Push too hard for payment from a slow-paying customer and you can wind up as a defendant in a lawsuit.

Avoid early-morning or late-night calls, and don’t discuss the debt with the customer’s employer. If the debtor has a lawyer, deal through the lawyer. A simple way to steer clear of collection problems is to not extend credit at all but accept charge cards instead. It costs a bit, but shifts the burden of collection to the charge card company.

6. THINK TWICE BEFORE FIGHTING UNEMPLOYMENT CLAIMS

Most employers hate to see an ex-employee file for unemployment benefits, so their first impulse is to fight the claim. Resist that impulse.

The unemployment laws strongly favor employees, so usually it[s a big waste of time to fight the claim. Besides, battling the ex-employee may increase the bitterness of a job loss and nudge the former worker into suing you for wrongful discharge. Use discretion. Fight claims only if you have a very good chance of winning; even then, it may not be worth it.

Legal strategies may vary depending on the state in which you live and the specifics of your situation. See your lawyer for legal advice.

Check back Thursday for the conclusion!

About the author

Fred S. Steingold

Hamilton, Judge, Schroer & Steingold, PLC

Attorney

 

Fred S. Steingold practices law in Ann Arbor, Mich., for the firm of Hamilton, Judge, Schroer & Steingold, PLC. He is the author of The Legal Guide for Starting and Running a Small Business and The Employer's Legal Handbook, published by Nolo Press.

 

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