In Show 097- Phase 10 – Litigation and Dispute Resolution originally broadcast on Facebook Live on Wednesday 6 June 2018 .
Download a copy of the worksheet for this episode here: 097 Worksheet
We dig deeper into Phase 10: Litigation and Dispute Resolution today on Business Legal Lifecycle. This phase comes just before selling the business in the BLL. We wanted to put it here in order to acknowledge that disputes and lawsuits are just a normal part of business.
Commercial litigation can happen at any point in the your business. You want to try and avoid heading to court but sometimes you can’t. Less than 1% of business disputes will end up in court and less than 1% of those will end in a decision. It can be a long and drawn out process and can be incredibly expensive. Every state has different rules about when and how a suit can be brought. Different courts will deal with different matters. Your lawyer needs to ensure they are commencing an action in the right jurisdiction. Once the action has commenced you then need to serve the other party. Keeping your registered up to date with ASIC is critical. You don’t want important court documents going to the wrong address. The courts are quite busy and a complicated matter could take some time to be scheduled. You need to be well aware of the lengthy time frame and the costs involved before you set out on that path.
Debt collection is a key issue that many businesses face. We recommend that you follow a standardized process. First, you want to send an invoice detailing the charge. That should include a deadline for when the money needs to be paid. If payment has not been made you need to follow-up with a simple email. It should be a friendly reminder asking for payment to be made. After waiting another week you should follow-up with a telephone call asking why payment hasn’t been made. After that you should send a legal demand stating that if payment isn’t made you will be referring the debt to a collection agency. That invoice should then be referred to a debt collection agency. It’s important to retain a well regarded agency that can affect a positive outcome quickly.
Reviewing contracts is a process that few businesses undertake despite being incredibly important. Most people just continue to use their standard contracts without giving them another thought. Those contracts may not be working the way you want them too. You don’t have to review every single contract immediately. Instead, review those contracts that you feel haven’t been working well. Try and do it at least every two years. Your business is evolving and so should your contracts.
Alternative dispute resolution is a much better way to deal with disagreements. Going to court can be extremely expensive and stressful. Mediation is one of the alternatives. An independent third party is brought it to try and reach an agreement. There are other ways to deal with disputes instead of just the payment of money. A mediator can identify some other ways to fix the problem. There is no real mandated process for mediation. Generally, they are there to take the emotion out of the dispute and offer real solutions. A mediator will never take sides. They are there to point out the weaknesses in each sides case.
Conciliation is similar to mediation. The difference is that the person deciding the case will usually have a specialization in the thing being disputed. They will provide both legal and practical advice to both sides. They won’t make a judgement but they will try and guide both sides to a resolution. They won’t take sides.
Arbitration has the added function that the decisions are usually binding.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.