Most people do not enjoy being a party to a lawsuit. Litigation is expensive, time consuming and stressful. However, litigation may be necessary to recover or preserve property, recover compensation for a life altering event or stop a bad actor from doing further damage. In a defendant’s case, litigation may be unavoidable. There is no surefire method for avoiding a lawsuit. After all, accidents will happen, people will do things that they are not supposed to do, and even well-intentioned people will have misunderstandings. However, in my legal career, I’ve seen several people end up in situations that could have been avoided.
This article offers a few tips on avoiding civil suits or, at least, reducing the associated costs and stress. The old adage “an ounce of prevention is worth a pound of cure” is an appropriate theme. Prevention of legal problems may come with a cost, but it is often much less expensive than the cost of the cure (if there is one).
Try to avoid doing business with a likely defendant
The most likely people to get you in a lawsuit are dishonest people or well-meaning people who just aren’t up to the task. Screening for these traits doesn’t take much time or cost much money. Ask for referrals and search online for information about the prospective business or person. If ‘Bernie Financial Planner’ has a theft conviction or has been successfully sued for fraud, you probably don’t want to put him in charge of your money. Other red flags include high-pressure tactics, having no online presence, having opened and closed multiple business under different names that do essentially the same thing, and having multiple negative online reviews or concerning online reviews. There’s a big difference in a one-star review complaining about the wait time at a doctor’s office and a one-star review saying “I paid Jim to build a pool and he never showed up to do the work.” Avoiding the likely defendant in favor of a more reputable option is the best way to avoid litigation.
Buy insurance. In addition to providing coverage for a variety of accidents and other acts, homeowners, errors and omissions insurance and general liability policies usually include coverage for the costs of defending a lawsuit. Having insurance won’t prevent litigation, but not having to bear the financial burden is a huge relief for most of us. When selecting insurance, make sure you understand what is and is not covered and keep the previous step in mind.
Get it in writing
Make sure your agreements are in writing and signed or acknowledged by all the parties. At the very least, have an email exchange that says who’s doing what. For example, Jim is paying Bob $35,000 to build a gazebo in his backyard at 123 Main St. Other terms should be included in the writing including the materials, color, dimensions and location of the gazebo. Also, consider the when, why and how. If Jim is having the gazebo built for his daughter’s wedding next month, the agreement should state why timely completion is crucial and that payment is conditioned on timely completion.
Read and understand
“I didn’t read it” or “I didn’t think that that was important” will rarely get you out of a contract. Read the entire contract, and don’t disregard terms that don’t make sense or that don’t seem material. Consider the effects of these terms if things do go wrong — what’s the extent of damage and the cost to me? If a term is not clear, amend it or get the other side to explain it in writing. If the agreement is not right for you, don’t sign it.
Many tenants sign leases without looking past the rent amount, expenses and expiration date. Some tenants have been surprised to learn that their residential lease has terms that restrict the size and breed of dog they may keep on the premises, that allow the landlord to enter and inspect their property and that dictate how long guests may stay. Commercial leases usually outline permissible uses of the property. If the permissible use is not clearly stated or suited for the tenant’s business, it may greatly affect his or her ability to make a living. When buying something new, we don’t want to think about it breaking. As a result, we tend to disregard the warranty. Some builders only warranty new construction for one-year. Give attention to what’s covered by the warranty and for how long and what’s excluded.
Finally, don’t get pressured into signing an agreement before you have had an opportunity to consult with a lawyer or at least take a few preventative measures. When in doubt or the transaction comes with substantial risks or costs to you, consult with a qualified attorney. If you’re already a party to a contract that is not working out, get legal counsel as soon as possible.