Business Law & Compliance

Avoiding commercial litigation as a business leader

5 min read

03 February 2016

Russell Hallam, managing partner at Turbervilles Solicitors, uses his latest legal column for Real Business to provide some invaluable advice for business leaders who don’t want to be caught up in commercial litigation.

No business owner likes to think they will cross paths on the legal front with customers, clients, business partners, suppliers or competitors. Yet each year, tens of thousands of businesses are dragged to court to battle out commercial litigation cases. This can take up lots of time, be a huge cost to the business and in the worst case scenario the business’s reputation can be severely damaged. 

Here are some top tips on how businesses can keep out of court.

(1) Transparency is key

Make sure your terms and conditions are clear and concise as it is vital they provide transparency to all parties, including what their duties and obligations are and may also assist in setting out boundaries to ensure each party is aware of what they can or cannot do. For example, it is common for contracts to have confidentiality provisions, so that parties are restricted as to whom they may discuss matters with or non-compete clauses in employment contracts. This principle should be applied to any document binding parties be it a contract or a deed.

(2) Review and revise terms and conditions regularly

Ask yourself whether they would work within the context of a particular deal, project or sale. And if not, ensure that you make the necessary changes/updates in writing and that each party has approved them. Don’t leave anything to a chat on the phone or even face to face. Depending on the nature of changes it may even be a good idea to put in place a deed of variation.

Read more about the latest court cases:

(3) When you can’t deliver, fess up quickly

There may be times when you may not be able to meet a deadline or carry out something that you agreed to do. If so, communicate this to the other parties at the earliest opportunity. Turning a blind eye will only make things worse in the long run. More disputes are likely to be resolved if the lines of communication between the parties are open. 

It may mean that the parties are able to find a resolution between themselves. That’s a far more attractive option than leaving the matter in the hands of a judge after lengthy persuasion, and possibly technical legal arguments as to why your position should be favoured over your opponents.

(4) Don’t fuel the fire

Try to remain objective when faced with a disagreement, it is more likely that parties will be able to reach an amicable resolution.

(5) Effective management

Properly manage your business, including effective credit control, and ensure that your business pays its own debts on time.

(6) Ensure your HR policies are up to date and in accordance with legislation

Make sure you have the correct policies in place for your specific business. For example, if your business deals with some aspect of sales then ensure that you have an anti-bribery policy in place. With the continued increase in social media usage it is imperative that businesses have social media policies in place for their employees. There should be a good disciplinary procedure which is clearly set out in an effort to minimise claims against you by employees.

(7) Act fast

If you find yourself in a threatening situation then you must act fast in trying to resolve the matter or obtaining advice as to your options.
 
Sometimes, there may be no option but to go to court – but it should only be used as a last resort so you can meet your objective.

If you’re wondering what the key employment law changes in 2016 will be in order to ensure you have a head start to the year ahead, then here are five important pieces of legislation that you need to keep in mind.

Russell Hallam is managing partner at Turbervilles Solicitors.