Top 5 Ways to Avoid Business Litigation

For a fledgling enterprise, even the remote possibility of litigation can be terrifying as it could lead to the failure of the business. An established business may be better equipped to handle the practical and financial aspects of litigation, however, it is still not something you want to worry about as a business owner. Although there is no way you can ever guarantee your business will avoid litigation, an Irvine business litigation attorney at Brown & Charbonneau, LLP highlights the top five things you can do to avoid business litigation.

1. Choose the right structure for your business. One of the first decision an entrepreneur must make when starting a business is what legal structure to choose for the business. The three basic options are a sole proprietorship, a partnership, or a corporation; however, there are a variety of sub-categories and hybrids as well. The type of structure you choose will impact everything from taxation to growth potential to personal liability. If you choose the right business structure it can also help to discourage litigation.
2. Reduce agreements to writing. This is, by far, one of the most common mistakes a new business owner makes – failing to reduce agreements to writing. In your everyday life, you make oral agreements with people all the time based on nothing more than the belief that the individual will honor his/her side of the agreement. In fact, you cannot imagine asking a friend to put an agreement in writing. You must sift your manner of thinking once you start running a business. Although oral contracts can, in theory, be enforced, the general rule in business is that if the agreement isn’t in writing, it doesn’t exist. While that is not technically true, the point is that it is very difficult to prove the terms of an agreement if the agreement was not reduced to writing.
3. Hire and train the right employees. As your business grows, so will the number of employees. Hiring the right people to help manage and run your business is crucial to the overall success of the business. Properly training those employees on everything from employment discrimination laws to dispute resolution will go a long way toward helping head off disputes.
4. Head off disputes before they become a lawsuit. Another mistake new business owners often make is to ignore or fail to recognize brewing disputes. Ideally, you should have a dispute resolution system in place that sends disputes up the chain of command in an effort to resolve them long before they turn into litigation. It may also help to include Alternative Dispute Resolution (ADR) clause in major contracts that requires a dispute to go to ADR in lieu of, or at least prior to, the filing of a formal lawsuit.
5. Have an experienced attorney on board. Legal advice and guidance is invaluable to any business – and it is not where you want to try and cut corners or save money. Having an experienced attorney on board from the beginning is often the key to preventing disputes from escalating into litigation. If litigation simply cannot be avoided, having an experienced business litigation attorney on your side at that point is the best way to ensure that the litigation is resolved as favorably as possible to you and your business.

Getting Legal Help

If you wish to protect your business from the threat of litigation, it is in your best interest to consult with an experienced Irvine business litigation attorney long before a dispute arises. Contact the team at Brown & Charbonneau, LLP today by calling 714-505-3000 to schedule your appointment.

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Brown & Charbonneau, LLP is a top-rated business litigation, corporate, real estate and family law firm in Irvine, California. We are honored to be named by Best’s Lawyers® as one of the Top Law Firms in the US, including the specialty area of commercial litigation. As an AV-rated law firm, we are proud of our 10.0 Superb Client Rating from Avvo. Our top-reviewed Southern California attorneys have also earned specializations from the State Bar of California, as Certified Trial Specialists, and are included amongst the elite attorneys to be named Super Lawyers®.

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