Establishing and managing a business can be exciting AND profitable. However, it’s natural for companies to encounter some bumps in the road no matter how ethical and cautious they are. Unfortunately, whether you’re in the wrong or not, being sued has happened to many companies – even ours. A legal battle is not only emotionally exhausting; it can be very costly and could drain your resources. Your reputation is important. You’ve worked hard at it. How can we keep it in a positive light?
Here is how you can help protect yourself and your company against most future legal issues:
1. Communicate expectations
In business, putting all your agreements in writing is the best practice. No matter the size of your business, protect yourself and your company using legal contracts. Be detailed in defining your products and services from both parties in your agreement.
It’s crucial to keep records regarding any transaction including meeting minutes, emails and text messages. Use of this documentation could be beneficial if your company unexpectedly faces legal issues. Remember, anybody can sue you – even when they are the ones who have breached your agreement. As bad as that is, in the hands of an unethical lawyer, your simple contractual dispute can be spun into a fictional “conspiracy” extravaganza designed to try to squeeze obscene amounts of dollars out of you despite the real facts. “How much will you pay me to go away?” There is a subset of attorneys that see class action and conspiracies in everything they come across. They give a bad name to the law, but they try to give an even worse name to you.
IdeaPros provides all of our partners with an eBook that explains how to avoid the common pitfalls in business.
2. Create an arbitration standard operation procedure
Always include an arbitration clause as additional protection to you and your business in all your agreements. This is because a binding arbitration clause will protect both parties and allow you and the other party to settle your issues civilly, outside the courtroom.
IdeaPros always uses arbitration clauses to avoid an unnecessary and long court process and to protect our partners. It’s much better to resolve differences quickly and professionally and avoid distraction from growing your business, and the lingering distaste that conflict fuels.
3. Create clear Payment terms
After successfully raising funds for your business, it’s important to stipulate payment terms clearly on a written contract for clients and employees. This is because you will want to make sure that you are clear on the actions of unfollowed terms and conditions.
Previously, IdeaPros did not have a strict policy regarding payment terms, and occasionally let our partners pay over time while we worked tirelessly in reliance on our partner’s good faith. We have learned from our own mistakes and now we generally don’t accept payments over time. Think about it, when someone fails to perform on their financial obligations after they just likely to blame themselves or to bad mouth you?
4. It’s okay to walk away
It is always essential that you are compatible with your potential business partner or client. Save yourself from future trouble and politely decline an offer or agreement if this is not the case. For instance, IdeaPros now follows a rigorous qualification process when reviewing a new potential partner and her business idea. Therefore, if either is not a fit, we politely decline, after sharing some other options that might work for them.
Above all, as a business owner, it is your responsibility to protect your company and its interests. It’s critical that your good name not be tarnished. If it happens to you, defend your ethics – you will prevail if you are in the right. Therefore, that unscrupuous attorney and his client can be sued for malicious prosecution and perhaps defamation. In conclusion, you will want to work to avoid legal issues in the future, and start by following the above tips in this article.
IdeaPros is a Super Venture Partner™ who has the resources, experience, and tools to help you succeed at this step or any step in the entrepreneurial journey.
We partner with entrepreneurs at any stage and who are ready to invest in the success of their idea. Apply for an interview and let’s explore partnering together.