When you’re setting up a new company, many business owners spend a considerable amount of their efforts creating the perfect product or service as well as launching a powerful marketing campaign. Unfortunately, very little thought is given to putting the necessary contracts in place to avoid potential litigation. After all, that’s not something that you need in the early days of your business. Or is it?
A simple consultation with the contract lawyers Melbourne companies turn to for advice, will quickly tell you that putting the right contracts in place is essential from day one.
Litigation is one of those words that sounds like it describes legal actions that take place within larger organisations. However, you may be surprised to learn that litigation can just as easily happen to a startup selling cupcakes from a home kitchen!
Typically, litigation refers to the legal process where an ongoing dispute between two or more parties can only be resolved via legal proceedings. The main cause of litigation stems from a breach of contract by one or more of the parties.
Litigation can happen against one of the following parties involved in a business:
- Company and employee (usually a breach of contract)
- Company and customer (customer believes they were unfairly treated)
- Company and 3rd party (such as injury on business premises)
- Company and vendors or suppliers (service-level agreements are not adhered to)
- One company to another (usually happens when intellectual property has been copied)
Expert Pointers to Avoid Potential Litigation
Ideally, litigation shouldn’t be any company’s first course of action. It’s not only expensive but ties up all the parties in proceedings that could take months—or years—to resolve. Still, a dispute where at least one of the parties feels they’re not getting a fair resolution will result in litigation.
Our team of experts have compiled a list of the most significant pointers to implement in your startup to avoid potential litigation. We’ve listed them below:
Put Everything in Writing
A golden rule of thumb is that you should put all contracts and agreements in writing. No matter how well you know or trust the other person, protecting your company from legal issues should always be your priority.
This is especially important when you’re setting up employee contracts and service agreements between yourself and vendors. A contract lawyer will be able to assist you with the basic agreements for each relationship.
Each contract should cover what’s expected and what the consequences are for non-adherence. Be sure to have these records in a safe and easy-to-locate place in case a disagreement arises.
Provide Essential Training
Having trained staff is another simple way to avoid potential litigation, especially from customers and third-party visitors to your business premises. Employees dealing with customers or suppliers should always be aware of the kinds of promises, arrangements or deals they’re allowed to make on behalf of the business. Ensure that your employees know of any service level agreements you may have with vendors or external contractors.
Keeping everyone in the loop of the day-to-day running of the business will reduce the likelihood of litigation down the road.
Focus On Clear Communication
If you’re busy, short staffed or even use a host of different communication channels, it’s very easy for lines to get crossed and wrong messages to go out. Make clear and concise communication a priority between all employees. This is especially important with new workers.
A few tips to improve workplace communication include the following:
- Have face-to-face meetings: Where possible, have regular face-to-face check-ins with your team. This will make it easier to clear up any potential issues before they get out of hand.
- Practice active listening: Don’t be the type of person who listens simply to reply. Listen carefully and try to understand what is being said from the other person’s perspective.
- Identify potential conflicts early: If you see a situation may get out of hand, it’s important to deal with it as soon as possible. Make all attempts to find an amicable solution. Keep a record of your efforts, as you may need it to protect yourself down the line.
- Create a receptive environment: For the most part, a receptive environment will help everyone communicate more effectively. That means that all parties in the environment should be encouraged to discuss how they feel and listen to feedback from other parties.
- Check understanding: Whether it’s instructions for a task or feedback on an existing job, be sure to check your employees’ understanding. Not understanding an instruction can often lead to a disagreement or even escalate into a more serious problem.
Having to deal with litigation can be both costly and time-consuming. It can also negatively affect your business reputation. Follow our tips to avoid being stuck in a litigation issue that could easily have been avoided!