How to Avoid Litigation

litigation

Disputes rarely depend on the facts. They are often more about the personalities involved.

That is why it is always a tough call to predict how they other party will act. Particularly, if there is a lot of fire in their belly. How that can translate into action is always uncertain.

If the trading relationship ends badly they may simply fade away. Often there is a reasonable likelihood that they may fire a few salvos, either as a means of venting or as a determined effort to claim damages of some sort.

It is usually impossible to clearly know their side of the story. You are not aware of what they have heard or what ‘facts’ they may choose to assert. Still, there is no need to be too shaken by their saber rattling. Even if they are aggrieved about something, they still need to go to that much bigger step of being willing to spend time and effort and cash to do something about it.  Once the costs become clear and the expenses mount, most people’s enthusiasm for a fight starts to fade.

Then, even if they do want to take it to court, it is not an easy task to prove assertions in a court. A high standard of evidence is required. Again, that process can be complicated, time consuming and expensive.

All legal action tends to be complicated, expensive and a huge business distraction. They would have to be very aggrieved otherwise they are not likely to continue down the litigation path.

When Storm Clouds Gather

You can’t always prevent problems once storm clouds gather in a business relationship. It may be possible to manage things though and minimize the damage.

You could hold a meeting with them to clarify things and allay suspicion. If possible, the safest course of action is to genuinely try to rejuvenate the trading relationship. If that fails, then all you can do is ride out the storm… if there is one.

Don’t be tempted to start cowering from their bluster. There is equally no need to aggravate the situation. Most litigation arises from anger rather than any valid assessment of the facts.

Trying to resolve things is not a sign of weakness. It is not a time for macho chest thumping. Aggressive posturing is often the root cause of litigation.

Instead, it is prudent business practice to try to avoid costly distraction from the main game of making sales and earning profits. That is what business is all about. The rest is rather futile.

Proven Solutions

In a number of US jurisdictions there are apology programs that encourage effective apologies and disclosure of mistakes. These programs have dramatically reduced medical malpractice payments.

A University of Michigan Health Service study found apology programs resulted in a 47% decrease in case payments and a decline in settlement time from 20 months to 6 months. Overall there was a 16–18% reduction in the number of closed claims.

This legislative approach is seen as a potential cure from the denial or silence tactics that doctors often felt compelled to use. Doctors were often afraid to apologise in case the apology was later used against them in a law suit.

Yet, research consistently shows patients are willing to accept the reality that mistakes happen. Patients will generally refrain from legal action if they know the mistake was both regretted and acknowledged.

The social benefits are clear: An apology = less litigation, lower insurance premiums and health care savings.

Broader Application

What we know works in relation to medical claims can also work in other commercial areas. Sometimes when people are angry it is because they have valid reasons for their anger. You’ve done a bad job, things weren’t handled right or mistakes were made. We are all human. These things happen.

Facing the music, providing a mea culpa or whatever way you choose to describe the process of trying to sincerely make amends, may be the most prudent commercial response. The cost and time saved by avoid litigation has a clear financial benefit.

100 Apologies

In one somewhat humorous example, Fahmi Fadzil, a Malaysian writer, made some inaccurate allegations on Twitter. He tweeted an apology soon after he’d posted a claim that his pregnant friend was unkindly treated by her employer.

That was not enough for the employer who commenced a defamation lawsuit. In the end a settlement was reached where Fadzil agreed to avoid paying a fine by tweeting an apology 100 times over the course of three days.

Each individually numbered tweet read: “[Number]/100 I’ve DEFAMED Blu Inc Media & Female Magazine. My tweets on their HR Policies are untrue. I retract those words & hereby apologize.”

It was an extreme example, but you get the idea.

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About Mark Toohey

Mark Toohey is an experienced commercial lawyer who has worked with both major law firms and as general counsel in the media, telecommunications, software and IT industries. He has been a lawyer, company director, marketing director, company secretary and entrepreneur. Mark's commercial experience extends way beyond the theoretical. He has helped launch a number of start-up businesses and his hands on experience was gained from negotiating and documenting deals for a wide variety of business initiatives.