The article, "Avoiding a Business Foul: Practical Steps to Dodge Business Litigation," by Jennifer Rachel Baumer was published in Nevada Business in March 2017.
The best litigation for business decision makers is the litigation that never happens. Court cases are time-consuming, expensive and take a business owner’s mind off business. The best way to avoid litigation? Document everything, know your obligations and be certain your protections are in place.
“It sounds a little simplistic, but I would say, know your legal obligations, comply with them, and most important, create documentation of your compliance,” said Lee Roberts of Weinberg, Wheeler, Hudgins, Gunn & Dial.
“Most litigation arises out of the business disputes with a party you’re doing business with, and it’s almost always about money,” said Roberts.
Step one in keeping a business out of litigation is to make certain the rights and obligations of both sides of a deal are documented. Whether with a formal contract created by a lawyer or a memo of understanding, or even a letter sent to the other side, it’s important there be some form of written documentation.
“Most disputes arise, in my view, from factual disagreements between two parties who want different things, or who believe that they’re entitled to some performance that the other side never expected to provide,” said Roberts.
“Keep and maintain comprehensive documents,” said Aviva Gordon, Gordon Law. “Plenty of businesses, local in particular, have been successful for a very long time and have followed the term of ‘a person’s word is their bond.’ Unfortunately that doesn’t always hold true and documentation is always the best way to go.”
Beyond documentation is understanding. Pat Lundvall of McDonald Carano, suggests business owners perform an internal audit, and hire competent counsel that will learn the business and evaluate the protections in place. Review employee handbooks and training of all kinds – safety, sexual harassment – and perform the reviews before there’s any threat of litigation.
“Every business-based threat, how do you protect yourself against those threats? As with any form of protection, the first line of defense is prevention,” said Lundvall. Business owners should ensure they’re covered by every type of protection specific to their business, whether that’s insurance or contractual documents or some other protection.
“Having an audit done is just sound business advice,” Lundvall added.
“Avoid bad clients,” said Max Couvillier, Black & Lobello. Bad clients can harm business. For example, in the legal field, red flag clients generally have been fired by multiple law firms. In real estate, it’s the client searching for something specific no one can find for him.
“A little Google search on the client, searches on public record, maybe about previous lawsuits, can help avoid litigation,” he added.
Business owners need a strong team of professional advisors like legal and financial experts. “Oftentimes business owners are very, very good at what they do and they don’t necessarily understand or appreciate other things they could be doing to protect their business,” said Gordon.
Nevada Fellow Pat Lundvall, a partner at McDonald Carano, LLP and chair of the firm’s Litigation Practice Group and Employment & Labor Law Practice Group, has vast experience in every phase of commercial litigation – from pleading and motion practice through discovery, settlement, trial and appeal. Ms. Lundvall has particular expertise handling complex business disputes and the substantive claims common to those disputes. Ms. Lundvall has successfully represented clients in judge and jury trials in state and federal court, as well as on appeal to the Nevada Supreme Court, the Ninth Circuit Court of Appeals and the U.S. Supreme Court. In addition, she has served as local and coordinating counsel for large, multidistrict, complex litigation. One adjective is repeatedly used to describe her litigation style - aggressive. Ms. Lundvall served as the former commissioner and past chairman of the Nevada State Athletic Commission from 2007-2016 where she was the first woman to ever be elected as chair of the commission. She was appointed to the NAC by Governor Jim Gibbons in 2007.