Avoid the Backed-Up Court System by Being Proactive

Anyone who has been in business for any length of time knows that solving disputes in court is costly and takes a lot of time in the court process (not to mention all the time that is involved in your preparation for discovery requests and eventual trial). In some state court jurisdictions, the reputation of the court system is that it can take 4 or 5 years to take a case through the system from start to finish. Once Covid-19 hit, many court systems shut down entirely, or were only open for emergencies. They tried to learn how they could run a court system which was not in person. This has backed-up the court processes and extended many court cases for an even longer horizon.

While you have no control over the length of time your business might spend in the court system, or the money that you will be spending to do so, you might consider being proactive so you can avoid being in the court process to solve disputes. Here are some actions you can take that may help:

1. It is a good idea to meet with your General Counsel and spend a couple of hours looking back at the lawsuits or issues that you have had over the past 10 years. (If you don’t have an in-house attorney, as many small and medium business do not, you should seriously consider hiring an Outsourced General Counsel who can serve in the same function with usually less cost and the same results. They work with you on a regular monthly basis to know your business and are not just hired ad hoc as crises arise.)

Sometimes, there is a pattern of things that can be changed within management that could keep the company from these problems. For instance, are you plagued with lawsuits by your employees against the company? If so, what is the cause of action that was raised against the company? Can these issues be resolved by better training or better hiring practices, taking more time to train the employees so that they are more involved in the business? Is the source of problems due to contracts that your management team signed without running it by your General Counsel? Almost all of these items can be reviewed with your General Counsel, who can develop systems and processes to limit the chances that your company will have issues that have to go to court.

2. Monitor your contracts and the issues that arise and nip them in the bud. At the inception of a contract, if your management team is having issues with the other side of the contract, raise the issues immediately. Have your team meet with their team to resolve the issues at the front end before they escalate into major issues with bigger damage. Larger potential damages will ensure that you will be in court to try to resolve the issues.

3. Make sure that the contracts that your management team signs are reviewed by your General Counsel. Consider having a business mediator who is named in the contract, who can mediate issues outside of the court system.

4. Hire slow, fire fast. Whoever said this was very wise. In this new pandemic timeframe, the number one business issue seems to be that employers cannot find workers to do the needed work to keep them functioning properly and growing. Instead of holding out for the right fit employee, they hire someone with less experience, without a stellar attitude, and/or with less education than the employee needs for that position. The manager in your company who hires thinks that they can train them and that they need to have a person in place at any cost. It turns out that the employee is a terrible fit, has no desire to learn, and/or just wants more money for doing a substandard job.

If this is your issue, consider a hiring practice where all new hires have a 60-90-day probation period. Counsel your management team that if they made a mistake in hiring, that it is a good idea to let the person go before your company has invested a lot of time in the employee, or the employee sues the company or brings claims to the EEOC.

This is certainly not an end-all list of items of proactive actions that can help you avoid a lot of issues in court, as there are many regulations, laws, tax issues, and more that can negatively affect your business and profits. You need to collaborate with your in-house General Counsel or with an Outside General Counsel to decide what is going to work best for your company.

However, if you don’t have these conversations and prepare properly, you can count on spending a lot of time and money in an already overburdened and delayed court system to settle disputes that you might have been able to avoid.

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Denice Gierach

Gierach Law Firm

Denice Gierach is an attorney, CPA, Northwestern University business master's graduate, and has owned several businesses from real estate to manufacturing. She is the lead attorney at Gierach Law Firm in the Chicago area. With more than 30 years of experience, she has been a respected and sought-after resource for businesses looking to grow, sell, solve problems, and succeed long term. Her insights across business areas gives a fuller lens to business issues and solutions, and helps businesses grow and succeed with less time spent on legal issues and other time-consuming problems.

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