Avoiding litigation at all costs – top tips..
- July 5, 2016
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Disputes in business are, unfortunately, inevitable for the vast majority of businesses at some point. Litigation is inherently risky, stressful and time consuming and more often than not, expensive. With the recent (further) increase in Court fees, litigation should be the last resort and whilst the majority of disputes can be resolved before you ever have to appear before a Judge, there are a number of practical and simple tips that all businesses, small and large alike, would be advised to follow to try and minimise the risk of disputes arising in the first place. If it is necessary to litigate, it may also increase your chances of getting an early and favourable result.
- Keep it in writing
Whilst all forms of communication are necessary to be successful in business, it really is crucial that any agreements or discussions that take place in meetings or over the telephone are subsequently confirmed in writing. Documentary evidence of this nature can often be the key to unlocking a dispute in your favour. As good as your memory may be, a Court will always find contemporaneous written documentation to be more compelling evidence during a trial than a witness’ recollection of events that took place during a telephone call several years prior.
- Carry out due diligence with customers/suppliers
In this day and age, there is no excuse for not carrying out checks in respect of other businesses that you choose to deal with. Information in respect of all limited companies (which includes the latest filed accounts) is currently available free of charge via the Companies House website. Similarly, you can also check out company and director insolvency statuses free of charge online.
- Review your terms of business
Make a point of reviewing your terms and conditions at least every 6 months to ensure that you are compliant with all of the necessary rules and regulations relevant to your business sector in addition to ensuring that you are protected in the event of disputes in the future. For example, inserting a clause within your terms of business which provides that the parties to a dispute agree to explore ADR (Alternative Dispute Resolution), such as mediation, can dramatically reduce the amount of time you spend in the Courts.
- Read the small print
All businesses in every sector enter into commercial agreements on a regular basis whether it be for a simple contract employing cleaners or more complex property leasehold arrangements. Whilst it may appear to be time consuming, there is no excuse for signing a document without reading it first. It is not uncommon for parties to believe that they understand the nature of the agreement they have entered into before a dispute arises at which point it may be too late to obtain a favourable resolution.
- Review your internal processes
All successful businesses run based on a number of underlying processes. In addition to implementing these processes, it is crucial to ensure that they are reviewed regularly. For example, having a clear credit control process in place for collecting outstanding debts is crucial to the cash flow of a business and further, being able to identify risks such as complaints and dealing with them early and effectively will minimise the possibility of disputes arising.
- Don’t delay / take advice
If it looks like a dispute may be on the cards and you are unsure as to your position, it is sensible to obtain professional advice at the earliest possible opportunity. As clichéd as it may sound, prevention is often better than cure. If a potentially litigious situation appears likely, there may be simple steps that can be taken at an early stage which result in valuable costs and time being saved in addition to the stress of litigation being avoided altogether.
- Remain objective and professional
Maintaining relationships is a crucial part of running a successful business. It is not uncommon for relatively small issues to escalate to full blown litigation which becomes disproportionate. Before picking a fight, take a step back and consider the consequences of threatening the use of lawyers or Court proceedings. Often, disputes can be resolved without the need for lawyers and Courts to be involved at all. It is often difficult to repair relationships once parties have entered into the litigation process, even if the result is amicable.
- Never pursue litigation out of principle
It is very unlikely to end well. If in doubt, take advice as to the best and worst case scenarios of taking a course of action. If neither seem particularly appealing, your decision should be made up for you.
If you are involved in a commercial dispute, or having regard to the above, are interested in knowing more about how to avoid getting in to one, please do not hesitate to contact David Hall, Partner in Cohen Cramer’s Dispute Resolution department on 0113 224 7808.