While running a business can be a good way to make a living, it also presents many opportunities for disputes, some of which can lead to costly and time-consuming litigation. Most businesses will be involved in a disagreement with someone (or some entity) at some point. Some disputes are small, while others have the potential to sink a company altogether. However, there are many things you can do to prevent such problems. And when they do arise, if you handle them carefully, you can greatly minimize the harm to your business.
Disputes between business partners
Business partners don't always agree, either from the get-go or later on when someone changes his or her mind. Differing ideas about the direction of the company can cause friction. Disagreements over profits (mostly who deserves more), distribution of the workload, or unethical or illegal behavior by a partner can lead to problems as well. Sometimes the dispute is between shareholders and directors or officers.
Oftentimes, people decide to go into business with people they know, such as a friend or relative. While the personal relationship may have been great, that doesn't always carry over to the business world. When emotions are involved, finding a common solution is difficult.
For this reason, it's wise to put business agreements in writing at the beginning of the endeavor. This way, if a dispute comes up, both parties can refer to the agreement to find the answer.
Of course, not everyone has a written agreement, or the written agreement is deficient, which won't be of much help in finding an amicable way out. Regardless, it is important to do everything possible to find a solution that works for both parties, both for the sake of the business as well as the relationship. Sometimes a neutral third party, such as a mediator or arbitrator, can help both sides find common ground.
Disputes between your business and another business or entity
Nowadays, businesses are intricately connected to one another. Chances are your business will have to contract with other businesses for an array of services, such as construction, cleaning, catering, or the supply of materials, among many others. These are all potential areas of dispute.
Disagreements often arise over breach of contract (i.e., one party did not keep its side of the bargain), but other areas breed disagreements as well, such as real estate, unfair business practices, or intellectual property.
Litigation can also arise between a business and government entity, especially when the business is not in compliance with the regulations relevant to the particular industry.
Regardless of the nature of the dispute, it's unlikely to be something you can handle yourself. The other side will mostly likely have its own attorney. You should seek the help of an experienced business attorney to even the playing field.
Disputes between your business and your business' employees
Unhappy employees make formidable legal adversaries. If you do not comply with all relevant employment law requirements, you run the risk of a lawsuit between your business and your employees (or former employees). Some common areas where employee disputes arise are:
- Worker classification (“employee” vs. “independent contractor”)
- Wage or vacation/family leave disputes
- Wrongful termination
- Breach of employment contract
- Sexual harassment
Complying with state and federal employment guidelines, as well as executing written employment agreements, can help prevent trouble down the line. Having a detailed employee handbook, outlining the expectations and rules of the job, is another effective prevention method.
Both state and federal law provide extensive legal protections for employees, which can be complicated. Once a dispute arises, don't delay. You need to contact a business attorney experienced in handling these types of cases as soon as possible.
Disputes between your business and its customers/clients
Another source of legal claims against your business is interactions with customers/clients. Any number of claims might be brought against your business, such as:
- Contract disputes
- Premises liability (i.e., slip and fall)
- ADA compliance (disability access)
- Products liability
- Assault or battery by an employee (such as a security guard)
- Medical or legal malpractice
Businesses are held to high standards where prevention of harm to customers and clients is concerned. Additionally, businesses are often targeted for lawsuits because they are seen to have “deep pockets.” Staying in compliance and ensuring adequate safety precautions can head off many of these lawsuits. Alternative dispute resolution is often a helpful option once such a conflict has arisen.
The risk of commercial litigation is one of the perils of running a business. Prevention is always best: Have agreements in writing, comply with the law, and get reliable legal advice for your business along the way. When a conflict is unavoidable, having experienced counsel by your side can make all the difference.
Helix Law Firm can help resolve and prevent business disputes
Whether you're in the middle of a business dispute, or are worried about a potential dispute, we can help guide you through it while protecting your business. We have been helping businesses throughout the San Diego area respond to and resolve business disputes for many years.