Preventing Litigation & Where To Focus Your Efforts

Let’s begin by shifting your focus inward. When you accept that preventing litigation is a cost-effective and efficient way of building a financially sustainable business, you may start to see threats from multiple angles. As an entrepreneur, especially one in the early stages of their first business’s life cycle, you have limited time and resources. With that in mind, we wanted to identify where your threats will most likely come from. We began this post with the advice of looking inward, meaning that some of your biggest threats may surface inside your business. 

Disagreements Are the Source of Litigation

Litigation is the culmination of a disagreement between two or more parties. Even if a customer is injured on your property, litigation may result if there is a liability dispute. Though you cannot neglect that customer disputes and contractual breaches can result in litigation, don’t overlook the people inside of your business, such as your employees, shareholders, and yourself.

That last point ties into partnership disputes. People talk about how frequently first marriages fail, but that same line of thought is rarely applied to business partnerships—which collapse at a higher rate than first marriages. Regardless of how strong your relationship is with your partner, you are not impervious to a partnership dispute. Though these disagreements range in severity, they still pull you away from your primary focus. One of the ways to avoid a partnership dispute is to ensure everyone has defined roles and responsibilities—all of which can be included in a partnership agreement. 

It may seem obvious, but it is paramount that both you and your partner accept and understand how decisions are made. Whereas it may seem convenient and straightforward for you and your partner to have equal rights in decision-making, take the tougher (and wiser) road and determine who is in charge. This can be accomplished by having all the partners sign a statement of control. In addition to establishing a hierarchy of command, you can outline what happens when a partner with lesser decision-making power disagrees with something. What is preventing them from selling their ownership to a competitor? 

You can have a predetermined plan for their exit and your ability to buy them out. The agreement could include a mutually agreed upon method for determining how their equity will be valued. 

Take an Active Role in Determining Your Future 

Though you can never know how your business partnership will evolve (or deteriorate), you can pre-determine how a conflict will be resolved if it surfaces. Even though the Law Offices of Robert Dawson have extensive experience handling business disputes, we encourage you to take the appropriate steps to prevent it from escalating to the degree where you need an attorney and a judge to resolve your issue. When that happens, we can also pursue alternative dispute resolution to help you and your business. Contact our office to schedule your consultation.

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Law Office of Robert Dawson

You have more power than you realize. If you need a professional attorney who has built a reputation within employment and business law, contact the Law Offices of Robert Dawson. We are passionate about protecting our clients and pursuing their interests. Contact us for tailored legal solutions.

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