Worried about getting sued? It’s a legitimate fear, and you might think that your first line of defense is to own your assets in judgment-proof entities. That’s a valid and recommended strategy, but even though ownership is an important element of an effective asset protection plan, the best way to avoid paying judgments, along with substantial legal fees, is to avoid disputes and the often-resulting lawsuits. Attorney Andrew A. Caffey offers step-by-step advice in Stay Out of Court! The Small Business Guide to Preventing Disputes and Avoiding Lawsuit Hell (Entrepreneur Press, 2005).
Caffey begins with a look at what he calls the civil lawsuit, sue-for-profit industry and its complex financial impact. He writes: “Business and professionals take the brunt of punishment in this out-of-control civil litigation game. The fear of being sued has invaded every aspect of our people’s lives. ”
Of course, getting sued doesn’t necessarily mean you’ll end up in court—in fact, chances are you won’t. According to Caffey: “Statistically, the vast majority of lawsuits never make it to trial. Estimates suggest that 90 to 95 percent of court filings are resolved, dismissed, abandoned, or settled without getting to a final judgment by the finder of fact (either the judge or a jury). ” But you don’t have to go to court to spend a bundle on legal fees and other costs.
Caffey blames the proliferation of lawsuits on what he calls victimhood and a culture that has shifted away from personal responsibility and accountability. It follows that if someone is a victim, then someone else should be punished and made to pay.
The solution, Caffey believes, begins with improving relationships through communication and conflict resolution. He says the first step in resolving a conflict is to take a “we” not “you vs. me” attitude. The next step is to put the conflict in perspective by reframing it in context with your overall relationship with the other person. Next, Caffey recommends gentle confrontation, which uses non-threatening questioning and active listening to enable the parties to share their views of the conflict. Identify the other side’s needs and locate your overlapping shared needs. Then you are in a position to find mutually beneficial solutions, reach a settlement, and put that settlement in writing.
Caffey says you should never totally turn a dispute over to an attorney for handling: “The moment when one party to a dispute yields direct involvement and puts the dispute into the hands of the lawyers is the moment when the lawsuit happens. ” Stay personally involved in the dispute to make sure your best interests are being considered and protected.
The sound advice on negotiating Caffey offers can be used for more than avoiding litigation—the techniques can be applied to all relationships and situations. For example, he recommends saying “yes” whenever possible, but if necessary, qualify the “yes” with an “if. ” Caffey writes: “Using the big IF in negotiating is an important habit to develop. It allows you to say yes, but it is always qualified. It says, ‘I am willing to give on this point, but I want you to give something back to me for it. ’”
Caffey offers excellent advice on how to use contracts to stay out of court and explains various dispute resolution processes, along with suggestions on providing warnings, notices, and cautions. He also explains how to apologize without accepting liability.
Using layman’s terms and sense of humor, Caffey has written a book that entertains while it delivers some of the most valuable asset protection and personal relationship advice you’ll ever receive.
Jacquelyn Lynn (www.jacquelynlynn.com) is a business writer based in Orlando, Florida, and the author of Online Shopper’s Survival Guide and the upcoming Small Business Almanac.