An economic downturn gives companies more time to plan legal claims. Lawyer Jonathan Mortimer offers his top 10 tips for avoiding a battle
Britain may not have America’s trigger-happy approach to litigation, but there is no reason to get complacent. If you run a substantial business, you should expect to be on the receiving end of a claim at some stage – especially in the current economic climate.
You might think people would not want to shift resources to legal expenditure but, in a downturn, companies may spend more time considering claims because they are not busy with other work. Meanwhile, businesses in financial trouble will hunt for reasons not to pay and will defend proceedings in order to delay payment.
Whether you are struggling to get payment from clients or a former employee is taking your business, it’s vital to avoid unnecessary legal battles. Here are 10 tips for staying out of the courtroom:
1 Include terms and conditions in your trading arrangements
Terms and conditions put you in the driver’s seat – they’re the first thing we ask about whenever we deal with a dispute about the supply of goods and services. Most clients have them, but many companies put them on the back of invoices or do not bring them to the customer’s attention before the sale or service is agreed. As a result, instead of discussing how your terms and conditions may help you to defeat the claim, you could be sidetracked by having to justify why the terms should apply at all.
2 Confirm agreements in writing
Don’t count on a handshake; a high percentage of our cases involve disputes about oral arrangements. They are just as enforceable as written contracts, but it is more difficult to prove them. It’s important that you confirm in writing what has been agreed and ask your client or customer to acknowledge what you have written. A detailed purchase order can also help.
3 Involve other managers when entering contracts
Again, this avoids a situation where it’s their word against yours. Ensure that key terms and requirements are discussed internally, and then in the presence of your customer, to ensure there is no possible misunderstanding.
4 Make your requirements clear
Too many businesses presume their supplier understands what they want when they order goods or services. As a result, we deal with numerous claims arising from the specification of any particular product or service. Provide a list of requirements before the deal is agreed.
5 If something goes wrong, tell someone immediately – and In writing
Courts are inundated with spurious defences to claims, so they can be cynical as to the merits of any case put forward. You improve your credibility by rehearsing a problem in writing as it happens. Raising a complaint when proceedings have already been issued will look weak and could prejudice the case.
6 Don’t delete electronic communications
You can avoid a dispute – or at least improve your chances of success – by having the evidence to prove your case. In many matters, what is said electronically is most important. Cases have been lost because clients did not have a proper method of storing electronic documents, or had not changed computer systems or retained copies of key documents. It’s crucial that you check your storage systems: claims can be brought up to 12 years after the event.
7 Take care over your emails
Emails are just as important as letters and can be used to make contracts, vary terms, or cancel an agreement. So take the same care when you put together emails as you do with more formal correspondence. Don’t forget to check emails – a customer could easily cancel an order without you spotting the communication because it is caught up with unread messages or is thwarted by your spam filter. Turn on your email out-of-office manager to make it clear when you are not able to accept messages, so your customers know they need to communicate in a different way. If necessary, consider changes to your terms and conditions to make it clear that orders or amendments cannot be made by email and must be confirmed on paper.
8 Keep your website up to date and compliant
Too many websites are out of date or fail to protect your position. Representations made on a website can be just as binding as a printed brochure or other piece of literature. Consider whether your website should include a disclaimer or contain terms and conditions, particularly if it offers online ordering.
9 Watch what you say
If you believe a dispute is likely, be careful what you say to your opponent. We deal with too many cases in which clients have prejudiced their position in the early stages by saying the wrong thing. You might accidentally make an admission, such as accepting that the order was not what it should have been, when it was well within the standard of service allowed in your terms and conditions.
10 Take legal advice sooner rather than later – anything else can be a false economy
You would expect a lawyer to say this, but it is perhaps the most important point. The law is complex and court procedures are taxing. We come across many cases in which litigants representing themselves do not have a clue what they are doing. In the 17 years I have been doing this job, I have only lost once against such a litigant; court statistics also indicate a low percentage success rate for non-lawyers.
Yet I still come across clients battling on their own who approach me when it has all gone wrong. Often it is too late. So, whether it’s an initial consultation for a fixed fee, or even a quick free call, take legal advice as soon as you can.
Jonathan Mortimer is head of dispute resolution at solicitor Langleys