Staying Out of Court

In all but the most extreme cases, you want to avoid going to court either as a plaintiff or a defendant. Courts offer uncertain outcomes. Even if you are right and see the situation as clear-cut, you can still lose your case.

The uncertainty of the outcome can be exacerbated by the timing of the outcome. It is difficult to predict how long a court case will last. While a small claims hearing might not take years, the possibility of any other type of case lasting that long is quite real.

If you suspect that you might eventually be forced to pay out a settlement, you might get lulled into delaying the end of a court case. But remember that you need to disclose outstanding suits in your financial statements, and such disclosures may affect your ability to borrow or raise cash. Also, settlements can be subject to interest.


The best way to stay out of court is to avoid problems before they occur. Run your business within the law. Run your business with humanity. Develop good, solid employment policies, especially in the critical areas of hiring, promoting, firing, and sexual harassment.

Use contracts whenever appropriate, with all the key details spelled out clearly in writing. And include in your contracts, whenever possible, a proviso that directs all disputes into binding arbitration, not court.

Consult an attorney whenever you have questions about employment or business decisions that may portend a legal risk for you. Spending a few bucks for a half of hour advice here and there is certainly worth saving the major expense of a court battle.

Early response

In many potentially litigious situations, an early response may avert a legal suit. Often legal claims arise out of misunderstandings, which good communication can alleviate.

For example, if you have decided not to pay the full bill invoiced by a supplier because the quality of the goods delivered was not satisfactory, call the supplier with your complaint immediately. Back up your verbal communication with a letter to that same supplier. You need to get the vendor to see the quality issue from your point of view and instill empathy for your situation.

Similarly, if a customer is not happy with goods supplied by you, handle the situation as soon as possible. By listening to that person’s complaint, trying to understand the problem from his or her point of view, and showing empathy for the situation, you have gone a long way towards avoiding a legal suit.

If an employee complains about sexually hostile behavior in your workplace, promptly take action to eliminate the behavior. This may satisfy the victim and keep you out of court. Even if the case does end up in court, your attempts to correct or alleviate the problem will count in your favor.

Settlement meetings

A face-to-face settlement meeting with the opposing party can help avoid the courtroom. Any such meeting should be conducted on a peer-to-peer basis. This means, for example, company president to company president. Of course, if you are the sole proprietor of a company and the other party is a large established business, don’t expect their president to meet with you in person. But do insist on meeting with someone in as similar a position to yours as possible.

If you encounter problems in attempting a settlement with another party through informal meetings, try a more formal approach. Try meeting in a neutral location with attorneys for both parties in attendance.

The presence of attorneys signals confidence. It sends the message that both you and the disputing party are willing to pursue the matter through the courts if necessary. Through such a meeting you will be able to ascertain the strength of the opposing party’s claim or defense, and hear his or her arguments much as you would should the case go to court. Of course, the opposing side will be able to size up your case or defense as well.


If you can’t resolve an issue with calls or meetings, consider binding arbitration. In this case, both parties agree on an arbitrator (often a retired judge arranged for through an arbitration organization) and agree that the results of the arbitration will be binding and may be entered into the prevailing court. Be sure to get the agreement to arbitrate in writing.

In court

There are exceptions to avoiding or delaying an appearance in court. Sometimes you will want to get there as quickly as possible. If your rights as a small business owner are being trampled on by a large corporation, think about going for it. Corporate giants typically figure that a small entrepreneur will back down because they don't have the funds to do legal battle or will agree to the first settlement offered, no matter what the conditions are.

You need to be absolutely sure that you want to pursue your claim through to resolution before you file with the courts. Have your attorney advise you. Find out what the costs might be, what the time element might be, and what the various outcomes, good and bad, might be.

By Source Streetwise Business Tips


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