Tips to Avoid a Lawsuit
Are You Sue Worthy?
In an increasingly litigious and greedy society, you don’t have to be a multi-millionaire to be sued.
Are you a juicy target for a lawsuit? You may not think so. It’s true that you have a few assets-a small thriving business (emphasis on small), a home that’s nice but far from ostentatious, an income that’s, well, respectable-but wealthy? No. Wealthy is the Hollywood plastic surgeon or the dot.com gazillionaire who made a killing in the ’90s. Wealthy is Bill Gates. Those are the people who should worry about asset protection, not some small-town entrepreneur who puts in twelve-hour workdays, and coaches Little League on Saturdays. Right?
Absolutely wrong. People think that only the super-wealthy, those with more than $5 million in assets, need to aggressively guard against lawsuits. Just the opposite is true. If someone with a small ‘fortune’ of a million dollars or so in assets loses, say $700,000 in court, he will be severely affected. He may no longer be able to retire. The extremely wealthy person could pay the $700,000 without noticing a change in his lifestyle-especially considering that he probably has a strong asset protection plan in place already.
But what about someone like you? Are you really likely to get sued? The harsh reality is that many, if not most, of the 70,000 civil lawsuits filed every day in America target small business owners and Americans with less than $1 million in net worth. And at Lodmell & Lodmell, where we serve clients who might be described as “comfortable but not extravagantly rich” – we believe assuming you won’t be on the losing end of litigation is a risky gamble.
The best way to protect your assets is to take legal steps to make yourself unattractive to potential predators.
There are solid asset protection structures you can put in place. And a good asset protection attorney, one with solid reputation and experience, can guide you in weaving together a series of increasingly protective legal shields that serve to deny unwanted access to your money.
Perhaps these tips bring to mind the oft-quoted adage, it’s not paranoia if they really are out to get you. There are plenty of greed-blinded, entitlement-minded predators out there who are all too willing to separate you from your hard-earned money. Protect yourself as best you can-but don’t let fear and cynicism become your defining characteristics.
Don’t flaunt your wealth.
Don’t practice a lifestyle that advertises you have a lot of disposable income. Even if you don’t consider yourself wealthy, if you’re driving a top-of-the-line luxury sedan and openly discussing lavish vacations, plenty of other people will assume that you are-and will see you as a juicy target for a lawsuit.
Draw up a pre-nuptial agreement before marrying.
It may not be romantic advice, but from a legal standpoint it’s definitely wise. Being served for divorce is the most common lawsuit.
Identify and correct any existing personal or business liabilities.
Use well-drafted and thought-out planning before the fact, and make sure you have planned for dispute resolution in the most efficient manner for after the fact. A majority of businesses fail in the first three years, and these often turn from high hopes to high drama as partners fight over the remaining assets. Good planning before there are problems can limit future potential trauma.
Know the employment laws backward, forward and inside out.
Few areas are as treacherous as those involving the employment of other people. Disgruntled ex-employees can fairly easily exaggerate or even fabricate incidents that “prove” they were victims of harassment or discrimination. Know how to legally interview, hire, and fire employees, and make sure those working for you know as well. For more detailed information about how to hire, fire and manage employees, we recommend that you contact our sister company The Center for Employment Dispute Resolution (CEDR)
Don’t play favorites with employees.
You must treat everyone equally. Think twice before you give an employee a special break or extra time off for any reason. This also applies to being too harsh on one employee and not others. If you don’t do the same for everyone, then you could be in for trouble.
Be scrupulously careful about doing anything that might be construed as sexual discrimination.
Here are some disturbing statistics: according to Jury Verdict Research, 38 percent of all verdicts between 1996 and 2002 involved claims of sexual discrimination. Equally sobering is the report from Jury Verdict Research that 67 percent of sexual discrimination court cases end with the plaintiff winning. And in 2000, the mean award for sexual discrimination was a hefty $529,373.
Understand vicarious liabilities.
Employers can be held accountable for the actions of their employees-sometimes even for actions the employers specifically told the employees not to do. Train them effectively. And if you have children, you have a whole other set of worries. Parents are often held accountable for the actions of their children (e.g., auto accidents).
Increase your automobile insurance coverage to the highest dollar amount.
Your medical practice isn’t the only place where you’re at risk for a lawsuit-our nation’s roads are fast becoming a highway to wealth. Make sure you are insured to cover a good chunk of medical expenses should you, your spouse or your children be involved in a lawsuit.
Implement binding Arbitration/Alternative Dispute Resolution agreements with all staff and everyone with whom you do business.
The American Arbitration Association estimates that 80 to 90 percent of the disputes it mediates and/or arbitrates are quickly and cost-effectively resolved without litigation. It’s just good business sense to legally require that any grievances between you, your patients, clients, or even your vendors be settled out of court in arbitration.
Adequately warn customers about potentially dangerous situations.
Personal injury lawsuits are big business. New York City paid $53 million in 2002 for “slip and slide” complaints, which led them to shift the burden for such claims to property owners. Putting up signs like “We use microwave ovens” or “Caution: wet floor” may seem simple, but they can go a long way toward preventing lawsuits.
Treat your clients and customers in an exemplary manner.
It may sound naïve or simplistic, but it’s true: being nice usually pays off. Most of us simply don’t like to sue people who we think are doing a great job. On the other hand, we have no problem suing those who “didn’t care about us in the first place.” If you needed it, that’s one more reason to practice the Golden Rule!
Yes, we do live in troubled times and our legal system is dysfunctional. But instead of bemoaning the lack of justice in our society, we must become a force for change. Any time you get the opportunity, speak up in favor of personal responsibility. Denounce greed. Always do what’s right and set a good example for your children. Unlike changes in legislative and judicial reform, changes in public attitudes cannot be mandated. They can be changed only through grassroots efforts at the citizen level. Be the change you would like to see . . . the country you save might be your own.