Tuesday, September 09, 2008

Avoid Litigation at All Costs

It may seem counter-intuitive that a lawyer is telling you not to get involved in litigation. However, my job as a corporate attorney is to make sure that my clients do everything they can to minimize the risks within their control and to avoid conflicts that can land them in litigation, or worse.

In comparison to the cost of making sure your business is on solid legal footing at all times, the cost of litigation is astronomical. And I'm not just talking about cash. The drain of valuable managerial time and energy resources required during litigation is often too much for a growing company to handle.

For young companies, in most cases, winning in litigation is less often about who is right and who is wrong, but about who has the deepest pockets to engage in a protracted battle.

Sometimes litigation is unavoidable. Consider alternative means of dispute resolution, such as mediation or arbitration, and where possible, include in all of your contracts clauses for mandatory mediation or arbitration to settle disputes. Also, if a reasonable settlement offer is available, think seriously about taking it instead of spending more time in court.

Better yet, invest time and money on proper contract drafting, by competent corporate counsel, prior to any major transaction to limit your exposure to litigation down the road.

Keep in mind that, in business, it's always much less costly to make sure the basic legal foundation of your company is right from the beginning -usually by a multiple greater than 20!
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