If there ever was a no-win situation for a business owner, it’s a frivolous lawsuit. Not only does the suit require attention, it also requires a lot of money in the form of lawyers fees to fight off the frivolous suit. The bad news is that nothing can prevent someone from filing a frivolous lawsuit. The good news is that there are a lot of things you can do to make it less likely that one will be filed in the first place.
1) Have really good contracts.
Much litigation – of the frivolous and non-frivolous variety – arises out of poor contract drafting or no contract at all. Having no contract or a poorly drafted contract can seem like a minor annoyance when things are going well, but when things stop going well, it can be a massive liability. This is because if the parties have not agreed upon a solution ahead of time, it is very unlikely, in the heat of the dispute, that they will agree on a solution that is amenable to them both. This is where litigation is introduced to allow a third party (i.e. the court) to interpret the contract for the parties. This rarely ends with either party being particularly happy with the outcome. Some strategic use of a good attorney on the front end to draft a good contract that is acceptable to both sides will go a very long way in avoiding this litigation.
2) Be choosy.
You may not always get to choose your customers or even your vendors, but when at all possible, be choosy. Choose vendors and customers who have a good track record of following the contract, paying on time, etc. This is good evidence that the vendor or customer understands how the business world works and is not inclined to rock the boat. Also, it is very easy to check records to see if the vendor or customer has sued in the past. If there are numerous lawsuits listed with the vendor or customer’s name in the first place (the plaintiff’s position), chances are this person really likes to sue people and you might want to find someone else to do business with.
3) Get liability insurance.
Just like you should have car insurance when you drive, you should also have liability insurance for your business because you never know what is going to happen. Business insurance has evolved to the extent that insurance for just about any kind of liability is now available for things such as defamation (i.e. you say something that is not true or not nice and someone sues you for it), intellectual property infringement, and more.
4) Have a good attorney on your side.
Often, knowing that someone is represented by an attorney who is both competent and aggressive will be enough of a deterrent for the would-be frivolous lawsuit filer (or their attorney). It is worth the investment to have a skilled attorney who understands the business world and can stand up when needed. The attorneys at Trembly Law meet this description and can be the first line of your defense. Give us a call today to get started.