Strategies can ease the pain of business suits

It is true that in business you cannot entirely avoid litigation. However, by conducting a close examination of your business and taking the following proactive steps, you can minimize your litigation risk and the resources you must devote to legal matters.

Ensure practices follow policies

Nothing is simpler than convicting a company that fails to follow its own written guidelines. Some companies attempt to combat litigation by creating detailed policy and procedure manuals. Although such materials can be helpful, they should not be used as a crutch. The strategy backfires when the company is aware its own procedures are being violated, but does nothing.

Provide effective product support

Effective marketing is essential to all businesses, but you cannot allow consumer expectations set through marketing efforts to exceed your company's ability to deliver. Many claims, whether for breach of warranty or personal injury, result from disappointed consumer expectations.

Proactively identify risk

Lawsuits are often filed out of frustration after companies ignore efforts to resolve problems. Avoid the temptation to ignore or put off dealing with problems, which could only make matters worse. If your company has an actual or potential product defect or problem, take charge in dealing with the problem now.

Understand the impact of e-mail

Many people do not understand that the confidentiality we assume exists with a letter may not exist with e-mail. The recipient of your e-mail can easily route your message to thousands of people with a simple keystroke. Lawyers are now focusing on internal e-mail records and just because an e-mail was sent long ago, or was deleted, does not mean it cannot easily be resurrected and then used against you or your company in court.

Investigate immediately

When an incident occurs, or it appears a claim may be filed, thorough investigation is critical. In conjunction with your counsel, if necessary, conduct witness interviews while memories are fresh. In many states, including Missouri, plaintiffs can wait years to sue.

Contact counsel early

Early contact with counsel can avoid costly mistakes. Moreover, discussions and investigations conducted by counsel generally will be privileged, which means they cannot be "discovered" by the other side.

Many companies have learned to their chagrin that their internal and supposedly confidential investigations become public once suit is filed if they are not otherwise privileged.

Determine policy issues

When a dispute arises, try to determine if the problem involves a company policy issue that could arise again, or if it is an isolated irritant. Quickly settling a case that hinges on a company policy may only yield more of the same type of claim, often filed by the same lawyers. Many companies have learned that settling a case for nuisance value yields no cost savings because word gets around that the company will pay easily and early.

Understand the discovery process

Many companies are horrified to learn about the discovery process that follows the filing of a suit against them. Your employees should know that once a suit is filed, attorneys have the ability to (among other things) force your company to answer questions in writing, produce documents, admit or deny facts, or make employees appear to be deposed.

In the past, papers written in jest and discovered within company files have become bombshells in the courtroom. Plan now for that contingency by ensuring that your employees understand that anything they do may be scrutinized in court later.

Deal with problems directly

Don't hide behind your lawyers. Counsel at an early stage can be critical to preserve the integrity of the attorney-client privilege and to avoid costly legal missteps, but you shouldn't rely entirely on them to solve the problem.

Taking proactive steps can help avoid litigation that can cost far more than the amount originally at issue.

Use alternative procedures

Ask your lawyers about utilizing mediation, arbitration or other devices to avoid the cost and expense of the normal litigation process. Although such procedures are not ideal for all situations, they are being used more often with great success.

In many cases, no matter what preventative measures have been taken, litigation is inevitable. The most important thing to remember when an issue arises is to call your attorney for a prompt evaluation of the situation.

(Randell Wallace is an attorney and the managing member of the Springfield office of Lathrop & Gage LC Additional information for this article supplied by Doug Dalgleish.)