An ounce of prevention...is an ounce less production

from NewsLink, Vol. 1, No. 4, Summer 1997

The proliferation of lawsuits has spawned a new branch of law. "Preventive law" shows companies how to shield themselves against lawsuits whenever possible, and to minimize the impact of legal action, should it occur.

"You want to do everything reasonable to avoid litigation because it's costly, time consuming, unproductive and emotional," said Jim Smyton, a small business lawyer in Buffalo, in an interview with Business First, a weekly in western New York.

What should a business do? Keep current on revisions to workers' compensation and Family Leave Act regulations. Keep careful written records and whenever possible, communicate in writing. Maintain strong policy and procedure manuals. Be sure to follow them strictly and fairly. Know how to communicate and understand the process of negotiating and drafting contracts. Be certain you have adequate insurance coverage. This may go beyond normal liability and tort coverage and include personal liability coverage for directors and officers. Treat disputes as priorities to be settled through good dispute resolution practices. If you are sued, contact a lawyer immediately. Treat the suit as a business event that may be arbitrated or negotiated.

Good advice? Probably. But it is worth remembering that preventive measures have costs. Money and time spent to avert lawsuits are money and time taken away from production. This is, in the end, another deterrent to job and capital formation. While business might be well advised to adopt a wide range of preventive measures, it is important to understand the economic consequences of the legal environment that makes them necessary.

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