The Top 10 Rules For Staying Out of Court

Jun 16, 2016
Shai Harary

It may sound counter-intuitive for a person who makes his living from litigation to share specific insights into how to stay out of court, but that’s exactly what I’m about to do.

My philosophy was handed down to me from my father and borne from schoolyard brawls: Do what you can to avoid a fight. Negotiate, apologize, run if you must. (And of course if that doesn’t work, then by all means, clench your fist, throw the first punch and make it count.)

Over the years as an attorney who’s pretty much seen it all, I’ve come up with at least 10 rules you can follow to try to avoid court unless/until litigation is your last and/or best recourse:

Because it all bears repeating, here’s a bit more about the 10 rules:

Rule No. 1: Do your due.
This means that you need to know what you don’t know. In other words, do your due diligence — which simply means taking reasonable steps to appraise and evaluate a given situation. By reasonable, I mean be as thorough as possible because after all, it’s not particularly thoughtful nor, for that matter, smart to dive headlong into any kind of relationship/deal, and in particular a business one, if you don’t who/what you’re dealing with. Start with a simple internet search, which should include reviewing your would-be associate’s social media profiles and any peer review sites s/he may be listed on (i.e., Yelp, Angie’s list). Then, depending on the level of commitment you are considering, think about bringing in a third party to do some deeper digging.

Rule No. 2: Evaluate the deal you’re about to cut.
Put it under the microscope and do so objectively. Don’t be so focused on getting the best deal that you can so that you “win” and the other side “loses.” You want to devise a win-win situation so that EVERYONE WINS – get it? If you don’t understand what’s in it for your potential partner, if you don’t know why s/he would want to do the deal or how that person is going to profit from it, then it’s not only a bad deal for them – it will certainly become a bad deal for you. Keep in mind that a win-lose deal id often a lose-lose deal that just hasn’t blown up yet.

Rule No. 3: Be clear.
When you’re entering into an agreement communicate clearly. Think about it this way: any agreement is like a dirty window that obscures the real vision of the deal until you scrub it clean. If you clarify key points such as the rights and responsibilities of each party, timelines (including milestones), strategies to move forward and benefits and burdens on both sides, then you establish the proper expectations and clean up the view for all involved.

Rule No. 4: Write it down.
Make sure the terms of your agreement are not just subject to your memory or worse, the other person’s memory. In other words, YES YOU ALWAYS NEED A CONTRACT! If you can’t or don’t want to put a contract in place because the cost of preparing a an official agreement would exceed the value of the deal you’re doing, then other written communication (emails, even text messages back and forth) can work as long as the exchanges detail the important terms of the deal. This is an acceptable, informal way to reach agreement. Conversely, an UNACCEPTABLE way to do business with anyone is a handshake deal. Maybe that worked once upon a time, but today courts are jam-packed with “he said/she said” cases – many of which started with a handshake.

Rule No. 5: Stay on top of it.
Once you’ve hammered out the terms and conditions and have a signed contract or other agreement in writing, it’s crucial that you pay attention to what you’re supposed to do and when, and what the other side is supposed to do and when. “The early bird catches the worm,” and people that pay attention get attention paid back to them in kind. You’ll inevitably save time and money if all of the key points and milestones detailed in your agreement are met. Conversely, you may lose all of that AND end up in court if you don’t revisit your agreement on a regular basis and take action to ensure all is moving forward as described and agreed to by you and your partner(s).

Rule No. 6: Don’t ignore problems.
When there is a problem in any business relationship, don’t pull an ostrich and bury your head in the sand. Open your eyes and your mouth and bring up any and all issues you have. You should also be proactive if you sense your business partner isn’t happy as well. If something feels wrong, it probably is, so don’t assume that someone else is going to take care of it. Unaddressed disputes are like vegetables ignored in the fridge. Left too long, they will rot.

Rule No. 7: It’s not personal.
If we learned ANYTHING from The Godfather, it’s the classic: “It’s not personal. It’s strictly business.” Don’t get upset if someone negotiates with you. If you are asked to give or agree to something in a business relationship that you don’t want to give, agree to or do, then just say no. It’s that simple.

Rule No. 8: Count the money.
If a dispute is pending, figure out how much it’s worth, specifically the monetary value. If it’s a small amount or if the size of the risk is disproportionate to the potential gain, then the answer may well be no, but it may be yes depending upon the circumstances and certainly if there’s enough at stake. Bottom line: If a dispute doesn’t make economic or emotional sense to litigate, then do all you can to resolve it.

Rule No. 9: Consider the cost of lost opportunity.
When you’re faced with a dispute and you’re considering filing a lawsuit, you need to think of what it’s going to cost you not only in terms of dollars and cents to litigate, but also what else could you be doing with the time and energy that you’re spending embroiled in a lawsuit. Could you be generating new business, finding new clients, moving in positive directions or otherwise benefitting from avoiding legal action? Calculating opportunity cost often is as important as doing taking a fiscal accounting of the matter.

Rule No. 10: There is no joy in being right.
Proceeding to litigation just to prove that you’re “right” is very expensive and also very lonely. In the process of trying to convince the world to embrace you perspective, you might find yourself losing friends and family, provoking a situation that is not ultimately financially in your favor, and/or alienating and angering your business partner all because you were “right.” Be prepared to be wrong and understand the other person’s point of view. Nothing is black and white, so accept the fact that you’re probably not without fault. Once you remove the emotion and the thirst for vengeance as a motivating factor, most likely you will understand that there’s far more joy in extricating yourself from a painful situation… which almost always is the best way to describe a protracted lawsuit.

These 10 Rules to Stay Out of Court will serve you well if you follow them. And if you don’t follow them or you can’t, I’m always here for you.