Eight Ways to Avoid Court—by Arizona Business Attorneys
Running any kind of business comes with its risks and rewards. One of those risks is legal liability. No matter what kind or size of business you are running, there is always the possibility that you will find yourself on the receiving end of a legal complaint. No business, from the small local service provider to the international goods manufacturer, can reduce its liability to zero. However, there are steps you can take as a business owner to substantially reduce your liability and the likelihood that you and your business will end up in litigation. With that in mind, here are eight tips recommended by experienced Arizona business attorneys to keep you and your business out of the courtroom.
1. Write it down
As a business owner, you’re making agreements with different parties on a regular basis. Agreements with vendors, contractors, manufacturers, agents, distributors, and more are part of the day-to-day of running a business. Convenience, a great personal relationship with another party, or other reasons might lead a business owner to rely on verbal agreements to keep a business running. However, a verbal agreement won’t protect you when something unexpected happens and you find yourself under pressure.
Consequently, make sure that all of your agreements are in writing, regardless of whether you have a great relationship with the other party, or the agreement seems trivial. Even the best relationships can sour when confronted with unexpected problems, especially where business and money are involved. Likewise, even agreements for aspects of a business that may seem like minor affairs can cause substantial problems and lead to legal liability.
Even with a written contract or agreement, legal disputes may arise. Parties may disagree as to the meaning of the written agreement. Occasionally, parties will knowingly and willfully breach the terms of an agreement. However, making it a habit to have your agreements in writing will reduce the frequency and complexity of the disputes (even lawsuits) you could be involved in.
2. Make sure you have a shareholder or partnership agreement in place
Unless you are the sole owner and operator of a business, your business needs a written shareholder or partnership agreement. This agreement should outline the responsibilities and benefits of each member or manager of the business. Having a well-written agreement in place will help ensure that all members of the business know what to expect. Even if you are the sole owner of your business, it is a good idea to have a good set of bylaws or a solid operating agreement in place.
These agreements can be drafted to protect your interests in your business by allowing you control over who can become a partner, how to sell an interest in your business, and the level of control other partners or shareholders can have over the business. An experienced Arizona business attorney can help you draft an agreement that will maximize the security of your business interests.
3. Trademark your brand
Your business name means a lot. For many businesses, the reputation that goes along with a name might mean as much or more than the tangible assets of a business. Therefore, it is vital for business owners to protect the name and reputation of their businesses and avoid legal disputes over it.
If your business name is also your brand, then having incorporated your business under that name first, or having a long-standing practice of using the business name, may not be enough to legally protect your brand if the dispute ends up in court. However, trademarking your business name or your brand will provide you with legal protection against others who might want to use a name identical or very similar to your own. By trademarking your business name or your brand, you will reduce your liability and protect the reputation of your business.
Registration of any trademark you use is strongly recommended and will protect your brand—as well avoid the possibility that you are unintentionally infringing someone else’s trademark.
4. Follow all employment laws
Lawsuits originating from employees or related to employment matters are one of the most common types of legal issues that business owners face today. Both the federal and your local state governments have enacted laws on a variety of employment matters. How much you pay your employees, how much time off they get, safety in the workplace, and workplace discrimination are all regulated by state and federal law. Keeping up with your obligations as a business owner can be confusing and time-consuming, and violation of employment laws can lead to serious liability and financial penalties.
To keep your business protected and compliant with all relevant employment laws, make sure you have a competent human resources professional and that you work closely with an experienced Arizona business lawyer to put policies and compliance systems in place that will guarantee that your business adheres to all required employment laws.
5. Don’t over-promise
Keep in mind that although you should make every possible effort to get your agreements in writing, a verbal agreement can operate as a contract as well under many circumstances. For that reason, be careful before you promise outcomes to a client or customer. Don’t tell a customer that a job will be finished in a week if you’re not absolutely certain you can have it done by then. It’s better for your business to keep the customer’s expectations within reason and then over-deliver rather than failing to deliver on an ambitious promise and ending up in court.
Overall, simply watch what you say around those with whom you do business. If someone takes what you say as a verbal promise or agreement to do or not do a certain thing, and you then fail to live up to their expectations, you may find yourself in an unexpected and undesirable legal dispute for breach of an oral contract. These types of dispute are rarely quick and easy to resolve. It’s better to exercise caution to avoid this risk.
6. Provide adequate and regular training
As a business owner, your employees are agents of your business. Employee behavior that violates established workplace requirements and regulations can put you and your business at risk. To minimize this risk, it is important that you provide regular, quality training to make sure that your employees are all aware of acceptable and unacceptable workplace behavior. Well-informed and well-trained employees will help reduce your liability.
Additionally, employee training is crucial to provide your employees the information they need to understand and follow current safety and other workplace regulations. In the event an employee is injured on the job, being able to show that you have taken the time to provide quality education and training on current safety regulations will greatly reduce your liability.
7. Get ahead of the problem and be willing to settle
Although some legal problems may take you by surprise, if you are careful and aware in your business management, you’ll likely know when trouble may be brewing. Businesses can spare themselves a lot of hassle and save money by addressing problems or potential problems early. Some problems that may seem trivial at first can end up leading to a costly court battle.
Addressing issues early may not always prevent a legal dispute, but by being willing to settle, you can still keep yourself and your business out of court and thereby save yourself a lot of time and money. Settling may not always be the right option, but sometimes setting your ego aside and being willing to compromise can help you avoid spending a fortune in court costs and legal fees. Having a business litigation attorney on call can help you know when negotiation and settlement might be the right option for your business.
8. Put down a retainer for an experienced business attorney
Operating a business is complicated enough; you don’t need the stress of handling every legal question that comes your way on top of it all. Experienced business attorneys can quickly and efficiently analyze your legal situation and advise you and your business on the best course of action. Issues that might seem to you to be impossible to tackle or that might take days of your time can be handled comfortably and quickly by an experienced business attorney. An attorney can review your contracts, help implement legal compliance programs, and help you understand where you stand when potential legal troubles arise. Having access to sound, professional legal advice early and regularly will help you make educated business decisions to limit risks and liability and avoid expensive litigation or minimize its impact on your business.
This general guide is one that anyone can implement to reduce the legal risk associated with owning and operating a business. Working with an experienced business attorney, you’ll be able to turn these suggestions into a tailored plan for your business that will keep your liabilities to a minimum and will allow you to operate your business with the peace of mind that comes from knowing your legal situation is in good hands.
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