The most important things you should be doing now to avoid litigation

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There are certain things all businesses can do to right now to reduce the possibility of litigation arising (even years before you have a dispute). And they just happen to be the same things that will reduce your legal costs if litigation does occur, and also make it more likely that you will win.

Getting the contract right

A contract can be in writing but it doesn’t have to be. It can be oral (e.g. “I’ll pay you if you do this for me”), written in a formal contract, or something in between: where some of what you agreed is in writing but other bits are not.

The first thing any lawyer, or court, will do when there is a dispute is to work out what was most likely agreed. And this might not be what was actually agreed. Lawyers do this by examining all the paperwork – and that means letters, emails and all those scraps of paper with handwritten notes on. And this exercise costs money – an awful lot of it if there’s a lot of paperwork or it’s not in good order. If it’s not a proper written contract, it’s unlikely that all the main points you agreed will be in writing, and this means there will be lots of scope for argument over what was and was not agreed. Yes, you guessed it, that means more cost and more uncertainty.

If it’s a large contract, or one that’s different from what you usually do, getting a lawyer to draft a contract is an important investment. Think of it as an insurance policy. They will also help you by asking the questions that you may not have thought of (e.g. “what would you expect to happen if such-and-such happened?").

Making sure all documents are kept safely – including electronic ones

This follows on from what I said above. Keep all your paperwork for particular projects in one place, put it in a file, preferably in date order.

One important area that small businesses in particular slip up on is electronic documents, which mean emails, word files, diary entries, in fact anything that’s on a computer (or smartphone). We’re all trying to be green these days so won’t be printing everything out, but that’s OK. Keeping them in one file on your computer can be useful but it’s not as essential as with physical documents as it’s fairly easy to search for things on a computer or server.

What’s important is that these documents are kept safely. Never dispose of a computer or server with its hard drives (where the data is physically stored) still inside. Also remember that hard drives often fail and without warning; in practice, their life expectancy can be between 2 and 5 years, although they can fail before this too. Although there are services which will try to retrieve information lost in this way, they’re not 100% reliable and cost a lot. The solution is to back up your data religiously. Make sure a copy of everything is on another hard drive.

Also, make sure you have everything recorded in writing too.

These two things will not cost you a lot (in money or time) to set up but will save you tens of thousands of pounds by helping you avoid litigation where possible and keeping costs to a minimum where not. Perhaps, even more importantly, they’ll help you win!

For advice on what should be in a contract, or to get one drafted, contact Sue Mann on 0845 003 5639 or here.

If you’re already involved in a dispute, or you think one could be on the cards, contact Gary Cousins or Nigel Musgrove on 0845 003 5639 or here.

Gary Cousins
Business Disputes Solicitor

For free advice on this topic please call us on 0845 003 5639.