“You can’t call yourself an Adult American until you have been sued at least once.”
That is my Marketing Director’s opinion, and it is not too far from true. More to the point though, you can’t call yourself a fully formed entrepreneur until you have faced litigation.
We should not fear or bemoan this. Going to court is a lot more pleasant than fighting a duel, which was how people settled disputes in previous centuries. Our swords and pistols have been replaced with lawyers and the only bloodshed is financial.
Yes, it will happen
You will be sued at some point. If you have suppliers, customers, employees or regulators, some day someone will find fault with you – justified or not – and seek either justice or retribution in court. As an entrepreneur, accept this fact of life and prepare accordingly.
First, do no harm: The best first tactic is to avoid being sued, and that is best done by being honest, cautious and compliant. If you cause no trouble, the odds of someone causing you trouble goes way down. Unfortunately, not down to zero, but close enough.
Avoidance is important because lawsuits are expensive, time consuming and distracting. Expensive is obvious enough, but in today’s society, the financial impact can be very serious. Lawyers are often the cheapest part of going to court. That money is better spent growing your business, not defending it.
Even simple litigation can consume the time and patience of you or your employees. Investigations, discovery, depositions, testimony and even jail time will reduce everyone’s productivity. For entrepreneurs, litigation can be woefully distracting, especially in a company’s early years when the founder is juggling many balls tweaking corporate culture, hand holding critical customers, and generally being hyper focused on their business.
Creative resolution: If you are being sued, don’t ignore it, assuming it will go away. Odds are it won’t. People don’t file court papers for the fun of it.
If someone has a beef with you, contact them early and find ways around a fight. Keep in mind that they hate lawyers and losing as much as you do. A win-win is one where you both can defuse the litigation bomb before it blows up in both your faces.
On the flip side, if you have been wronged, make sure the battle is worth it. The emotional drive to see “justice” prevail can cloud your thinking about what is good for your business. If in doubt, let someone without a stake in the issue – a mentor – help you decide if suing is worth the time, distraction and potential loss.
Exclude ego: I have been sued by people with outsized egos trying to vindicate their own sense of self-worth. They lost.
Egos might work for celebrities and politicians, but they don’t for business litigation. If your ego is telling you to sue, then let someone else make the call. Egos don’t win lawsuits, facts occasionally do.
Know your position: You only have a mere 50% chance of winning any case even if you think you have all the facts in your favor. But there are a lot of elements that confound facts. Loopholes, your opponent having better lawyers, biased judges, and easily swayed juries can make facts moot.
If you get sucked into a jury trial, know two things; the jury doesn’t want to be there and will likely side with whoever they believe isn’t at fault for them having to endure jury duty. If a juror thinks you are a “troublemaker”, they will not argue your points to the other eleven jurors.
Also, when it comes to juries, facts matter less then how you are perceived. Take a hypothetical instance where all the facts clear the defendant, but during cross-examination he sounds like he is lying. Jurors are instructed to base their decision on the facts of the case, but how the facts are perceived are, in the jurors’ minds, factual. If you have a strong case and twelve angry jurors, you can still lose.
Don’t argue: Never be argumentative. Be it trial by jury or judge, don’t argue. Doing so can make you look guilty, as if you are trying to hide facts through argumentation. Always be calm and kind even if you feel otherwise, and let the facts make your case for you.
Prepare and avoid
Remember that legal problems are in your future. They are avoidable, though never completely. Do your best to be honest, work with integrity, respect everyone’s dignity and do the right thing. These behaviors greatly reduce the odds of landing in court, and they also improve your odds of winning in court.