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 7 through 12 in a 12-point strategy that can help.
7. CHECK OUT LAND USE REGULATIONS
A zoning ordinance states what kind of business you can conduct at a given location. If you violate the ordinance, the city can take you to court to close you down.
There are also private rules known as deed restrictions or conditions, covenants and restrictions. These allow neighboring property owners to take you to court for violations. Make sure your business complies with these public and private regulations.
8. PLAN FOR THE BUSINESS DIVORCE
The break-up of a relationship with a co-owner can be as devastating and costly as the break-up of a marriage.
You and the co-owners of your dry cleaning business should have a written agreement saying what happens if you can no longer agree on how to run the business—or if one of you dies or wants to sell out.
9. UPDATE YOUR EMPLOYMENT PRACTICES
In recent years, some of the most expensive litigation has involved an employee’s claims that he or she was unjustly fired. Don’t promise job security unless you intend to follow through.
And give employees ample notice if their performance is slipping and their jobs are in jeopardy. A firing shouldn’t come as a surprise. If you document your warnings in an employee’s file, you greatly reduce the risk of being sued. To avoid discrimination charges, enforce your rules equally.
10. CHOOSE YOUR BUSINESS NAME CAREFULLY
Check business names in your county and state to make sure some other business didn’t get there first.
If the name has special value, or you’re planning to do business in more than one state, it pays to have a national name search made. You don’t want to have to go to court to defend your business name.
11. CONSIDER ALTERNATIVE DISPUTE RESOLUTION
Think about putting an arbitration clause in all contracts. Arbitration is usually quicker and less expensive than litigation for resolving business disputes.
If you don’t have an arbitration clause in a contract, you and the other party can always agree to arbitration after the dispute arises. Mediation, too, can help. Although mediation isn’t binding on either party, an experienced mediator can usually settle a dispute.
12. GET PREVENTIVE LEGAL ADVICE
It’s less expensive to get legal advice before a problem arises than afterward.
Keep your lawyer informed of your business plans and seek advice if you think you’re getting into a sensitive area. Educate yourself on legal issues by taking a course at a community college or by checking out a book or two at your local library. Scan the newspaper for trends in business law.
Legal strategies may vary depending on the state in which you live and the specifics of your situation. See your lawyer for legal advice.
Have a question or comment? E-mail our editor Dave Davis at [email protected].