Keeping Litigation Costs Low

There are many small steps that you can implement into your policies and practices that will make litigation cheaper, should it ever end up in court.


First, even if you insist on drafting your own contract, at least hire any attorney to review it. We are trained to squeeze ambiguity out of your language the way that you might squeeze water out of a sponge. One misplaced word, comma or heading can have significant implications as to the interpretation of your contract.


Second, make sure that for every contract by which you are to receive money (as opposed to deliver goods or services), there are mechanisms for making collections either unnecessary or cheaper.  You should have a provision for late fees and/or interest to incentivize payment without legal action. If a large amount of money is at stake and you have even the slightest concern about the solvency of the company with whom you're contracting, consider requiring the owners/executives of the company to personally guarantee any debt.


Third, make sure that your contract includes an opportunity to cure any alleged breach. It can be as little as 10 days but then you have an automatic right to fix the alleged breach before being dragged into court and start bleeding legal fees.


Fourth, make sure that you proprietary information is protected by including a injunctive relief clause, allowing you to get a court to make the other part stop using your information before their use does serious harm to your business that requires protracted litigation.


Fifth, make sure you are indemnified where appropriate.  This could keep your litigation costs at $0, even if you're named in a lawsuit.


Sixth, memorialize EVERY agreement in writing.  It can be an email. If you make an oral agreement with anyone, at any time, sent a quick email confirming the substance of the conversation and the terms of the oral agreement.  It does not have to be formal in order to protect you. Get in this habit now.


Seventh, keep a log of all conversations, telelphonic and otherwise.  Should any dispute arise at a later date, contemporaneous notes regarding the substance of the conversation will always be viewed as more reliable than their memory.


Eight, and I've said this before, research every company or individual that you're considering doing business with BEFORE you sign on to work with them.  People who have done bad things in the past, will likely do so again.  People who sue everyone who they perceive has "wronged" them, will sue you should a dispute arise.

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