Legal issues come in many forms:
· A customer failed to pay an account despite many promises. · You just received a letter from a government agency. · You just found out that your former manager has set up a competing business and has stolen your best customer and one of your key employees. · You have just been sued for $100,000. · Someone told you that one of your standard form contracts won't stand up in court and you are worried about it. · You have a dispute with your landlord. · You have a problem with a US or European customer. · Your business has been defamed on the internet. · You just found that your warehouse manager has been sexually harassing a female employee. · An employee is damaging your business but threatens to sue if you fire him. You are not sure how to handle it. · You are involved with a Workplace Safety Insurance claim.
These examples are just the tip of the iceberg of the kinds of legal issues business people run into frequently.
Tip #1 - Seek out legal help at the first sign of a problem
Suppose a competitor has been passing off its business under your name and it's costing you customers and sales but it's hard to estimate the amount. Unless you act promptly, it may be too late to seek an injunction from the Court. If you think you have a claim against another party under a contract, a limitation period begins to run from the time the contract is breached and usually expires two years later. It's not a good idea to leave the claim to the last minute.
If you have an issue with an employee who is working unacceptably, it's important to develop a legal strategy as early as possible. The longer you wait, the more it may cost your business.
The short point here is that it is important to seek advice as soon you detect a problem and before anything has been done to make it worse. Crisis management is always more expensive and time-consuming than early response.
Tip #2 - Have a team of lawyers to call on when you need them.
Every business should have a team of on-call lawyers. This is less expensive or complicated than it sounds. All you need are the telephone numbers and email addresses of trusted corporate, employment law and litigation lawyers. Depending on the nature of your business, you may also need an intellectual property lawyer, who deals with trademarks, patents and copyright. You may even need a tax lawyer because not all tax issues can be solved by an accountant.
If the amount of your legal dispute is very small, such as a claim or complaint by a customer for $1,000 or less, it will be uneconomic to hire a lawyer. Fortunately, there are other helpful resources. The BBB has a dispute resolution process which permits BBB businesses and their customers to resolve disputes by arbitration or mediation. You don't need a lawyer and the only cost is a small administration fee. More information about this process is available on the BBB website.
If your case is in the Small Claims Court ($10,000 or less), you might need a paralegal who specializes in these kinds of cases. Paralegals are now regulated by the Law Society but they are not lawyers and they are not a substitute for an experienced lawyer.
Tip #3 - Learn what to expect when a dispute arises.
As a business person, you have learned that success is often the result of building relationships. The relationships you build with your lawyers can be just as important to your business success as the ones you have with your customers, suppliers, banker and insurance broker. A relationship with your lawyer built on mutual trust and respect will save you many sleepless nights over the years and probably make or save you a lot of money.
There are several ways to find good lawyers for your business:
Ask business associates or relatives if they have someone to recommend. If you get a recommendation, find out more about the firm and the lawyer by using some of the research methods below. · The internet is a very useful resource for finding a lawyer but you have to be careful. Any lawyer can list with various online legal directories. Anyone can have a flashy website. You have to move past the flash to find the substance.
When looking for a lawyer on the internet, look for someone who has experience in the field you require. The first name on a Google search may not be the best choice. Some lawyers have written extensively about the law. This is a useful indicator of expertise and standing in the legal community.
Some lawyers list cases they have been involved in on their websites. Broad litigation experience in complex business matters over many years is a good indicator of competence.
The Law Society of Upper Canada (Ontario, Canada) has a lawyers' referral service. The service provides a name but you have to check the details out yourself. · The Law Society certifies specialists in several areas of practice. Certification as a specialist signals that the lawyer has achieved a higher standard of experience in his/her area but certification isn't mandatory. Many competent lawyers have long experience in a field without applying for certification. You have to decide if this is important to you.
· If your problem is outside Ontario, find a local lawyer first. Many firms have networks with lawyers globally and are able to refer to lawyers in the USA or other countries. Refers between colleagues are often more effective.
When you call, don't expect the lawyer to solve your business problem over the telephone. The first discussion is for the lawyer to identify whether s/he can represent you and for you to assess whether the lawyer appears to have the skills to deal with your problem. If you have a legal problem the lawyer believes his/her firm can resolve, an office meeting will be arranged.
In business matters, lawyers customarily charge a consultation fee for the first office meeting. At the meeting, the lawyer will give preliminary or urgent advice and develop a go-forward strategy. The lawyer may be able to give a partial fee estimate and will ask for a retainer to cover some of the work. No lawyer can guarantee the outcome. At this early stage, there are usually a lot of unknown matters. While the lawyer may be able to give you a partial fee estimate in a litigation matter, it's impossible to say with accuracy how much it will cost. It depends on too many unknown factors.
It will be then up to you to decide whether or not to hire the lawyer to represent you further. The decision you make will depend on your sense of confidence in the lawyer. Has the lawyer listened to you? Have your questions been answered? Does the lawyer appear to understand your problem? Has the lawyer presented the risks and downsides of your case? Every case has risks and costs. Beware of a lawyer who tells you only what you want to hear without assessing the strengths of the opposing party's case.
Some lawyers will accept a monthly or annual retainer which entitles the client to telephone advice a few times a month. More complicated issues require separate engagements.
Tip #4 - The least expensive lawyer is unlikely to be the best person to handle your legal problem
Consider this scenario: you are looking for a lawyer for a complicated lawsuit. You call Mr. Jones, who answers on the first ring. You tell your story, which has many facts the opposite party disputes. Mr. Jones says, "You have a great case. I'm sure you're going to win." When you ask how much it will cost, Mr. Jones says "Don't worry, you won't have to pay me anything unless you win. Just come on down to my office and we'll get started."
Beware of any lawyer who tells you this. While Ontario lawyers are permitted to charge their fees based on contingency, i.e. a percentage of the result, this type of fee arrangement is only rarely applicable in business cases. It never occurs when facts are in dispute, recovery is uncertain or if the amount is small.
When you retain a lawyer, you need a trustworthy advisor, who will point out the weaknesses of your case as well as the strengths. A litigation lawyer who is waiting by the phone for your call and tells you exactly what you are hoping to hear may be too hungry or too inexperienced to manage your case. He may be in over his head and will bail out as soon as your case takes a negative turn. By then, your legal situation may have worsened. It will be more expensive and perhaps impossible to repair it.
Even worthwhile cases require careful analysis and risk assessment. An experienced litigation lawyer will typically do his by for fees on an hourly basis plus GST and any out-of-pocket expenses necessary for your case.
Good litigation lawyers are often in court, at mediation or other litigation procedures, at meetings or discovery. However, good litigation lawyers always call or respond by email within 24 hours. In case of urgency or vacation, the lawyer will arrange for someone in the office to contact you.
Tip #5 - Prevention is better and much less expensive than litigation.
Legal problems are like computer crashes --- they are bound to occur, it's just a matter of time. Unlike computer crashes, some lawsuits can be avoided. Often, businesses owners deal with legal matters only when a crisis arises. They look for the least expensive lawyer to draft their leases, contracts, corporate and employment agreements without regard to skill, competence and experience.
Sometimes, business owners avoid legal steps like failing to make a shareholder agreement, failing to file a trademark application or failing to prepare a non-competition and non-solicitation agreement with a key employee. When served with a lawsuit, they ignore or tear the papers up in anger. These business owners will be caught short when the inevitable occurs. While litigation or arbitration may still occur when there are written agreements in place, you will be in a far more secure position if you have taken precautionary steps before the dispute occurs. If you respond to correspondence and legal papers promptly, you will be better protected than if you ignore them.
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