David A. Asiedu
You cannot stop people from suing you. Let us get that out of the way, first. Many people think that litigators like it when their clients get into trouble. But that is not really true. At least not commercial litigators who see themselves as their clients’ partners in running and protecting a business. If a litigator works for, or with, a business, their top priority is (or should be) preventing the business from getting into trouble and being sued. That is dispute avoidance.
But, again, no matter how professional and charming you all are in your company, you cannot prevent the next person from suing you, if they want to. So, a commercial litigator’s next top priority should be guiding and assisting the business-client to be in the best position to defend itself – and win – if things go south, and the business gets sued. That is dispute readiness. This article looks at eight simple and specific steps and habits that all businesses can adopt to avoid litigation, or to give themselves the best chance of winning, if a ‘fight’ cannot be avoided.
- Diaries and calendars
We all forget things: events, deadlines, promises, obligations. And missing any of these can often lead to litigation. Missing a date is a common cause of litigation. It could be a 90-day, credit-sale payment deadline. A cut-off point for seeking an extension or cost overrun in a construction.
The last possible date to inform a landlord that a company would not renew its tenancy. The date to deliver a product by air or sea. A boss may miss a date because she is relying on a secretary who has simply forgotten or who is away on his annual leave. Calendars are not only for meetings and important anniversaries. You can diarise so much more: due dates discussed in emails, on phone calls or at in-person meetings.
Contracts are especially tricky. They come with all sorts of due dates buried in long text. Find them and diarise them. Diarise all important events in an electronic calendar like Google Calendar, Outlook Calendar or Apple Calendar. It will save you some serious pain. The beauty of calendars is that they ‘come to you’, in the form of reminders, when it is time to remember. You can set reminders for three days, one week, two weeks, one month, etc., ahead of the due date. Then, you cannot ‘forget’. And you will not get sued for missing an important date.
- Recap emails
Too many disputes come about (even in the modern business world) because different people remember undocumented discussions differently. A lot of ‘terms’ are still agreed by phone or over a handshake. And, yes, picking up the phone to talk to people has some advantages over sending impersonal, lifeless emails. But just talking has a weakness too – you can only prove that you talked; not what you talked about or what you agreed with the person at the other end.
If you have talked to a client representative about an important matter, find a way to document it. Use a recap email. Here is how it works. As soon as possible after a phone conversation or an in-person meeting, send an email to the person on the other side. Summarise what you discussed and any next steps. You can ask them to correct anything inaccurate in your email.
It is prudent to copy in another person in your organisation, if no confidentiality rules oppose this. This would be extra proof that your email was received after you clicked send. If you ever find yourself in court, the evidence of your recap email may not be a knockout-punch, but it will go a long way in strengthening your position against an opponent who remembers oral conversations differently from you.
- Under-promising and over-delivering
This is a simple technique, really. It is about managing expectations. Can you provide a service in seven days? Even if you can, are you in control of every input in the chain of production or delivery? Why not promise 10 days to give you wiggle room? It is really that simple. So simple that it is approaching a universal law of sorts. Lawyers routinely promise five business days to produce, say, a legal opinion, when they are quite certain that they can do it in three.
The urge to appear more efficient, capable and experienced than your competitors may be strong. And it may often win you business. But there is good reason to under-promise and over-deliver, even with already-existing clients. It is widely known that many clients often overstate the urgency of the work they are ordering from service providers, and many are quite happy to negotiate a small leeway into the time lines. In any case, why over-promise and hurt your reputation, lose business or, worse, get dragged into unnecessary litigation?
- Communication to avoid surprises
We have talked about (i) diaries & calendars and (ii) under-promising & over-delivering as handy techniques to litigation-proof your business. But what if, despite your best efforts and habits, something slips through the cracks and you drop the ball on delivering a service or product?
I cannot tell you how many times lawyers are instructed to sue somebody because they did not care enough to warn their customers that they would no longer be able to deliver as promised. True. Many business people are reasonable and understand how any business can deliver later than planned or agreed. But too many people (knowing that they are staring lateness in the face) would still ride their luck until the last moment, or past a delivery deadline. Do not let that be you.
Many a court case might be avoided if, as soon as one realised that they would not make an agreed deadline (but before the deadline arrived), they reached out to the other side to communicate the challenge in a simple, clear and empathetic manner. No tricks. No lies. No ‘finessing’ the facts. More often than we fear, the person on the other side will agree to extend the deadline. Even if they do not (or cannot), our position will be no worse. If they will sue, they will sue (despite your early communication). But the chance of getting their understanding (even if slim) is worth the effort. It might even earn some judicial sympathy in court.
Just remember to communicate as soon as you realise that a negative outcome is likely. People like only one type of surprise – pleasant.
- Dispute-resolution clauses
The focus of this article (never mind the title) is general dispute avoidance and dispute readiness. But this tip is specifically useful for avoiding the courts. We have agreed that you cannot avoid all disputes. If somebody wants to sue you, they will. But what if it is the courts you do not particularly have a thing for? That is common. Many people have legitimate reasons they do not fancy the courts. It could be a bad past experience. It could be the perception of bias (whether real or not). It could be an apprehension that the courts would rely on strict law and ignore business and industry-specific nuances. It could be the slow pace of court proceedings.
You can insist on arbitration and alternative dispute resolution clauses in your contracts, to avoid the courts (or to delay their power to accept disputes). This is a great and effective choice, once you get proper legal advice on the pros and cons of the courts vs alternative dispute resolution.
- Legal opinions
As a general rule and as tortoise-and-hare races go, business innovation is the hare, and legal innovation the tortoise. When you are setting out on any business venture (whether in an established area or a new area), things can go wrong – wrong within your organisation, wrong with regulators and wrong with your customers. It makes sense to obtain a legal opinion on the risks you face if things go wrong.
Legal opinions are a form of crystal-ball gazing to predict the future. Lawyers rely a little less on sorcery (okay – much less) and a little more on a controlled, empirical and predictable environment. The simplest way to define a legal opinion is perhaps this – the lawyer states that, “considering the assorted factors of legislation, decided cases, articles & textbooks, the attitude of the courts, practical considerations and my experience as a lawyer in this country, if this scenario went to the courts, they would likely decide it in that way”.
While legal opinions are not a 100 percent, foolproof guarantee, they often identify problem spots in contracts and transactions ahead of time. And they give businesses the heads-up to prepare strategies to deal with problems and disputes when they arise. In truth, legal opinions are also a cushion – they give business managers and decision makers a shield to hide behind if things go awry.
- In-house lawyers
This one may not be a simple and everyday move to start with. But it will be, once it is set in motion (Newton’s first law, anyone?). It’s up to each business to decide if and when it has the resources to employ an in-house lawyer. But that may not even be the right trigger-question. The better question may be whether the business has significant daily risks to make employing an in-house lawyer a sensible move. A good in-house lawyer’s costs to the company will typically be nothing compared to the money and headaches they will save the company.
Employing in-house lawyers and engaging external lawyers is not paying twice for the same function. But let us not stray from the topic. Good external lawyers would be the first to tell you that they feel better equipped to do the work when they are instructed by a good in-house lawyer (because the latter understands both the law and the company’s business).
I have heard business people swear that lawyers – both in-house and external – are ‘blockers’. That they stand in the way of progress and innovation. Of course, this isn’t true as a sweeping statement. Some lawyers will tell you that “the law doesn’t allow you to do that”, and then go to sleep. Other lawyers will help you to structure your transaction in such a way as not to break the existing law.
Lawyers go in-house knowing the law. It is your duty to teach them the business. That way, you have your personal specialist on the laws relevant to your industry, as well as an everyday means to avoid or manage disputes.
- Training and development
This one is easy. Business owners and managers may understand customer care, why it is important and what it looks like on a day-to-day basis. Employees may not always have the same understanding. But employees’ acts and omissions often lead to disputes. It is important to spend time and other resources to train employees on how to treat customers and care for them.
A lot of disputes result from ‘hard causes’ like poor performance and late delivery. But far too many also result from poor customer relations, which lead untrained employees (not their fault) to aggravate a situation they should, and could, have defused. There is little more to say about this.
Conclusion
There you have them – eight tips to litigation-proof your business. There are several other substantial things you can do to safeguard your business against litigation, or to improve your chances of winning if you cannot avoid a fight. They include proper record-keeping (but that is par for the course, no?). And tendering (offering) payment to the other side or making payments into court (in appropriate circumstances).
The eight tips in this article are a good (and relatively inexpensive) place to start. Obviously, the kind of lawyers you engage will also play a big part. The ‘sea’ is full of many intelligent, tenacious (even aggressive) and experienced litigators. But, perhaps, businesses should look beyond those ‘standard’ qualities. Are your lawyers doing ‘3D lawyering’ for you? Are they combining (i) technical knowledge, (ii) business sense and (iii) a mind for quick and cost-effective alternative solutions (such as settlements)? The ball is in your court.
>>>the writer is Partner-in-Charge, Commercial Dispute Resolution, at ENSafrica Ghana. He can be reached via [email protected]
