Claudine Morgan and Anna Smart, Litigation and Dispute Resolution lawyers at Charles Russell Speechlys share their expert views on best ways to avoid disputes.

Becoming embroiled in a legal dispute can potentially have catastrophic consequences for a business. Disputes are costly, not only in terms of the financial costs and damages but can also cause:

  • Loss of future business
  • Disruption to current business
  • Anxiety for individuals involved
  • Damage to staff morale
  • Diversion from the day-to-day operation of the business
  • Personal liability of senior executives and damage to their personal standing
  • Damage to other business relationships
  • Adverse publicity / damage to reputation

Without doubt prevention is better than cure.Here are our top 10 tips for the avoidance of legal disputes.

1. A contract is essential. You should ensure that:

  • The contract is clear, properly drafted and, if appropriate, tailored to individual transactions.
  • An appropriate person is authorised to negotiate a contract and that pre-contract negotiations are clearly “Subject to Contract”.
  • Relevant personnel know the contract, note contractual deadlines and important information.  Don’t fail to deliver.
  • The contract stipulates your conscious choices concerning applicable law, contractual remedies, dispute resolution procedure such as court, arbitration or  mediation / ADR.
  • Your terms and conditions of business are validly incorporated.
  • The contract addresses any potential problem areas presented by the counterparty, eg. shareholder; employee; supplier; customer; partner; purchaser; agent/principal; adviser.

2. Don’t ignore regulatory frameworks such as HMRC, HSE, FCA. Seek advice if necessary.

3. Don’t ignore a potential dispute; seek to resolve problems before they escalate.

4. Risk management: consider whether a properly drafted risk management policy is appropriate. This should include clearly understandable internal procedures to identify risky transactions. Current risk management procedures should be reviewed and their effectiveness considered.

5. Train and educate staff about risk management procedures; early identification of potential problems and how to react appropriately to risk.  Be aware of problems caused by hastily sent electronic communications. The policy should be implemented effectively and up-dated in the light of lessons learnt.

6. Take early legal advice to assist you to produce a cost / benefit analysis; make an early case assessment and have a clear strategy if a potential dispute arises.

7. Someone with authority needs to take ownership of a problem early on to seek a pragmatic solution; remove anyone emotionally involved.

8. Consider whether you should seek PR advice to manage external communication.

9. Keep good records, they can be the key to successful dispute resolution; consider making notes of important meetings/calls/events.  Resolution communications should be “Without Prejudice”.

10. Have effective corporate governance to ensure directors comply with legal responsibilities.

For more information in relation to any of the above or should a commercial dispute arise, despite best efforts to avoid it, please contact either Claudine Morgan or Anna Smart on (0)1242 246320 or Claudine.morgan@crsblaw.com Anna.smart@crsblaw.com

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