Wednesday, August 3, 2011

Lawsuits Don't Solve Many Problems

The moniker "litigious society" has become synonymous with the American system of justice in the 21st century. You've been wronged, and somebody has to pay. But will legal action really produce the result for which you hope?

While you are the only person who can answer this, it would be wise for you to consider 3 Reasons Your Business Shouldn't File a Lawsuit, an article I wrote for Lendio.com hoping to help business owners think through all of the ramifications inherent to taking an aggressive position like a lawsuit to reconcile their differences with others or to try and right any wrongs or injustices they've suffered. In most instances, legal action is best as a last resort, not a way to get things started.

In a recent visit with a well-respected CPA and business advisor, this battle-tested entrepreneur explained that he regularly counsels his clients to budget and plan for increased legal costs as they grow, primarily because it's likely sometime during the years of business operations that someone or several someones will decide to pick a fight with them, potentially causing irreparable damage to their business.

If his advice is true, and I think it is, no wonder many entrepreneurs become more and more risk averse as their companies grow and prosper.

KEY TAKE-AWAYS:
1. Seek to resolve disputes and problems with other means before determining if a lawsuit will yield the optimal results for which you seek.

2. Prepare your own business for and protect it from those anxious to jump into a legal battle with someone they perceive as having deep pockets (or an insurance policy that could give them access to an insurance carriers deep pockets).