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Q: I am getting sued for the first time, after being in business for 20 years. I know you used to practice law. The fees the lawyer quoted me are astronomical. What can I do?
A: I have good news and bad news for you.
First the bad news: Almost assuredly this is going to cost you money. That’s not the question. The question is, how much? And that’s the good news. There are ways to keep your fees “sensible.” Here’s what you need to know:
Legal fees are negotiable: Look, if you go to the biggest firm in town on the 30th floor of the tallest high-rise, no, their fees are not negotiable. But for many of the other lawyers in town, their fees may be far more flexible than you realize.
Why? Because clients are valuable and not always easy to get. You are a valuable commodity if you are looking to hire an attorney. Use that. Per hours fees may be negotiated, flat fees are possible, and fees for little things like emails and quick phone calls should be minimal.
Litigators have a vested interest in lawsuits. I know of no lawyer who would ever suggest that a client enter litigation without good cause. But that said, you also need to know that lawsuits are money pits for clients. But for the firm, they are a cash cow. So, beware of being the client that is keeping the firm in the black.
Sometimes you just have to cut your losses and walk: There is a tendency, especially in litigation, to keep going because you either don’t want to lose or you really want to win. But, as Kenny Rogers once advised, you have to know when to hold ‘em and know when to fold ‘em.
Fighting is expensive.
Q: Steve – I have read your advice about the dangers of lawsuits. I am fairly new to business and have a busy retail shop I love. I would hate to get sued. That scares me. How can I avoid that?
A: There are few things worse in the life of your business than getting sued. It takes time and money and bandwidth and it’s aggravating and, yes, scary. Litigation generally, and defending a lawsuit in particular, is among the top reasons why entrepreneurs don’t always like entrepreneurship.
Are there ways to reduce your chances of getting sued? You bet. Here are a few:
1. Be reasonable: The very general standard in a lawsuit is that someone is wrong if they acted “unreasonably.” Example: You don’t clear the ice in front of your store, even though you know it is a slippery hazard. That is not “reasonable” in the eyes of the law.
So, be cautious. Keep your word. Do the right thing. Keep safety in mind. Be reasonable.
2. Work it out: Lawsuits are very often the option of last resort. A person (the litigant, also known as the plaintiff) feels aggrieved about something and sees no other option. Typically, first, he or she will try talking it out, or maybe having their lawyer write a nastygram. Whatever the case, suing someone is usually not the first option.
Given that, when something goes wrong at the store, my general advice is to listen and try to work it out. Settle if at all possible. No, you may not want to, but the alternative is usually worse.
3. Don’t sue: Sure, people will likely sue you if you breach a contract or harm them in the course of business, but they also may not, because they know what you know: lawsuits are a drag. But you significantly up the chances of getting sued if you sue someone. Why? Two reasons:
- Countersuits are a legitimate litigation strategy. They think you will be more likely to settle if they sue you back.
- People who are being sued are people who are mad. And people who are mad, sue.
4. Get insurance: If you are properly insured, there is far less reason for someone to sue you. First of all, insurance should pick up the claim, and second, if it doesn’t, the insurance company likely becomes a better target than you. Additionally, if you buy the right sort of liability insurance, it covers the cost of your legal defense. So even if you are sued, the bite, at least financially, will be more palatable.
Steven D. Strauss is one of the world's leading experts on small business and is a lawyer, writer, and speaker. The senior small business columnist for USA Today, his Ask an Expert column is one of the most highly-syndicated business columns in the country. He is the best-selling author of 17 books, including his latest, The Small Business Bible, now out in a completely updated third edition. You can also listen to his weekly podcast, Small Business Success.© Steven D. Strauss.
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