Four Simple Ways Individuals & Entities Can Mitigate Risk When Doing Business
When business deals become business disputes the risk of litigation greatly increases. Unfortunately, when parties to a business deal cannot agree on the path forward they are generally left with two options: (1) start the process of litigation (including pre-suit activities like demand letters and pre-suit mediation if the parties will both come to the table) or (2) cut their losses and walk away.
Litigation can be a lengthy, costly, and emotionally draining process. Having practiced as transactional, trial, and appellate counsel, I’ve seen firsthand how disputes can escalate into full-blown, multi-year court battles. As an experienced litigation counsel I firmly believe there are no winners in litigation. Yes, eventually there will be an end to litigation and there may be a party (or parties) deemed to be prevailing by a court of competent jurisdiction, but there are no winners.
This is because the real winners are the parties who avoid disputes all together. While sometimes litigation is unavoidable (there are no guarantees in life or in law), there are several steps you can take to minimize your chances of ending up in court.
Do your homework about who you are doing business with.
Thanks to the Florida Public Records Act (codified in Chapter 119 of the Florida Statutes), Florida has incredibly broad public record laws and Florida has made accessing public records more convenient through robust online platforms such as:
Florida Supreme Court and Appellate Court documents and opinions.
Florida Supreme Court, supremecourt.flcourts.gov
Florida’s First District Court of Appeal, 1dca.flcourts.gov
Florida’s Second District Court of Appeal, 2dca.flcourts.gov
Florida’s Third District Court of Appeal, 3dca.flcourts.gov/
Fourth District Court of Appeal, 4dca.flcourts.gov/
Florida’s Fifth District Court of Appeal, 5dca.flcourts.gov/
Florida’s Sixth District Court of Appeal, 6dca.flcourts.gov/
Clerk of Court Websites: County-Level clerks provide access to court records, real estate transaction documents, and more.
Brevard County, Florida Clerk of Courts, brevardclerk.us/
State Agency Portals: Many Agencies maintain searchable databases for permits, licenses, and regulatory actions.
The Division of Corporation’s website, sunbiz.org, for records including those of Florida Corporations, LLCs, Partnerships, and other entity information.
Florida’s Department of Business & Professional Regulation, myfloridalicense.com, provides information about applicants and licensed individuals for those professions and businesses that are regulated by the Department of Business and Professional Regulation (including but not limited to cosmetologists, veterinarians, and real estate agents).
Florida Bar, FloridaBar.org, provides information about those licensed to practice law in the state of Florida.
So do your homework on the business or individual you (or your entity) are considering doing business with. Google reviews and testimonials are excellent but a deeper dive into easily accessible public records can provide insight beneficial to the decision-making process.
2. Get Everything in Writing
In my experience, many disputes arise from misunderstandings or disagreements over the details of the agreement. Because the devil is in the details, verbal agreements, while legally binding in many cases, can lead to significant issues if there is a disagreement later. The best way to prevent this is to ensure that all agreements, especially those involving money, services, or property, are outlined in writing.
A well-drafted written agreement (a contract) serves as clear evidence of the terms agreed upon by both parties. It’s essential to include specifics such as timelines, payment terms, responsibilities, and dispute resolution procedures. A handshake and verbal promise may feel more personal, but when it comes to protecting your interests, a detailed written contract is indispensable.
It is not enough to simply reduce every agreement to a writing. In order to best mitigate the risk of future litigation you should ensure that you (1) have read the entire writing (and any documents referenced therein) (2) understand the obligations and the benefit of the agreement, and all the benefits and obligations discussed are detailed in the writing; and (3) retain a copy of the writing signed—at least—by the other parties to the agreement.
If you are unclear about a term, an obligation, or a benefit in a writing, just ask for clarification (in writing) and/or have an attorney review the document before you sign it to advise you of the legal implication of the term, obligation, or benefit described.
Having an attorney review a contract before you execute it is the best practice. Not only can an attorney identify any areas of concern, but they can make suggested revisions to best protect your interest, or negotiate different or better terms with the other party on your behalf.
3. Communicate Effectively
Disputes and litigation often stem from a breakdown in communication. Whether it’s a business deal, a landlord-tenant relationship, or even a family matter, clear and open communication can often prevent disputes from escalating to litigation. If a problem arises, address it immediately rather than letting it fester or assuming it will work itself out.
At the beginning of a disagreement, engage the other party in a constructive conversation; seek to understand their perspective; and work toward a mutually agreeable solution.
Regardless of whether there is a disagreement or not, keep a record of all communications related to the agreement. Emails, letters, and even detailed notes from phone calls can serve as valuable evidence if the situation deteriorates and a dispute arises.
Confrontation or discussions which stem from a dispute can be uncomfortable but not addressing the issue can have long-lasting and potentially permanent ramifications. If engaging the other party on your own would not be constructive, these pre-suit actions can be taken by an attorney on your behalf.
4. Seek Legal Advice Early
Many people hesitate to consult an attorney until they’re already facing a lawsuit. However, seeking legal advice early can prevent a dispute or litigation altogether. An attorney can help you understand your rights and obligations, identify potential legal issues before they occur or escalate, and advise you on the best course of action to protect your interests.
It is imperative to note: There are options beyond a demand letter or litigation when an agreement breaks down. Pre-suit mediation and non-binding arbitration are alternative dispute resolution mechanisms that can help parties resolve disputes outside of traditional litigation.
Final Thoughts
Mitigating risk and avoiding litigation requires foresight, clear communication, and, often professional legal guidance. By securing all terms and details in writing, communicating effectively, and seeking legal advice early, you can reduce your chances of ending up in court. There is no magic pill to eliminate all risks associated with doing business. However, these steps can go a long way in helping you avoid the time, expense, and stress associated with litigation from an agreement gone awry.
The best lawsuit is the one that never happens. Taking proactive steps early (before entering any agreement) can save you from a costly legal battle later.
I offer a litany of contract services for business and consumers. Schedule a time to chat about how you can be doing the legal side of business better.
xoxo, Tiffany