Disputes are never pretty. Like a demanding toddler, they can be all-consuming, distracting you from running your business and keeping you up at night.
More importantly, you’ll be relieved to hear they are avoidable – you just need to know how to recognise the warning signs, so that you can steer clear of any potential danger.
In our many years of lawyering we’ve seen it all: from disputes that go on for years, to warring founders and even well-known brands reneging on watertight deals.
More often than not, it boils down to problems in relationships and process, rather than the letter of the law. We’ve distilled all our experience into eight tips so you can learn from others’ mistakes and not your own.
Don’t get into bed with anyone you don’t trust
Do your homework on any new customer, supplier or partner before you start doing business with them. Check their credibility with:
- a simple Google search to check any press coverage
- a review of social media to see what they’re saying and what others are saying about them
- a Companies House and credit check
Are you confident they can meet their financial obligations? Or do they have a history of litigation and bad debt? You can get hold of most of this information easily and a couple of hours’ work can save you a lot of long term pain.
Remember it’s not them, it’s you
The responsibility is on you to make sure everything is running smoothly and that processes are followed. You may not have the time or resource to review every deal but keep a close eye on the ones that expose you to potentially larger liability.
Identify where the biggest risks are and allocate resource to them. For example, what will it cost you if a supplier doesn’t keep to a particular delivery deadline? Plan for this eventuality. We see lots of disputes arise because a small problem was overlooked and allowed to snowball.
Be crystal clear on who’s responsible
Identify who has the authority to make decisions about supplies, sales and other risks and tell your staff about it. Put a simple sign-off process in place. Having the right people reviewing and making business decisions allows you to weed out any problematic commitments before they become set in stone.
Know exactly what you’re getting into
Read and make sure you properly understand your contracts with customers, partners and suppliers before you sign them. If you don’t understand certain terms, ask for clarification either from the customer/partner/supplier or from a lawyer so you understand your obligations and any potential risks.
Too often we see companies asking for help getting out of contracts they didn’t read and/or understand before entering into them. And often then it’s simply too late. If you can’t negotiate the protection you need consider if you can get insurance for the liability.
Your terms should be on your terms
Your own business’ terms should reflect how you want to do business. Generic T&Cs that you pulled off the internet might end up stopping you from doing business because they are overly detailed, and customers spend too long negotiating them.
Make sure too that your terms are in plain English. Unclear terms and contracts and/or waffley legalese are the root cause of many disputes. You may agree to ‘delivery in 3 weeks time’. But, what exactly are you delivering?
When does the time period start from? The clearer the wording, the less room there is for argument. Work with lawyers who understand what you want to achieve and make it easier for you to do business, not harder.
Don’t assume your sales people know how to complete deals
Have they been trained on your contracts and terms of business? Do they really understand what they mean and how to explain them to customers? Do they know which bits they are allowed to negotiate, and which are non-movers? Do they know who needs to sign-off on changes to the contract?
Make sure you give your sales people the tools they need to be able to do deals quicker and more effectively. Work with legal to get this done so that you aren’t taking your sales people away from their selling. This will save you time and money in the long run.
We often see sales people taking out key clauses or making changes that don’t make sense to get the deal done (and get their commission!) but that then come back to bite the business.
Get a grown-up complaints policy in place
This is too important to be bodged together with sticky plasters. Make sure that your customers and suppliers know who to contact, where and when if they have a problem. Disputes spiral out of control fast when people feel frustrated, ignored or sidelined.
Brief all your staff on your complaints process so that problems are escalated to the right person quickly. A complaints line that doesn’t work can be a red rag to a bull.
Create an open, speak-up culture
Nipping problems in the bud can help avoid disputes in the first place. Encourage employees to tell you about issues as soon as they arise so you can deal with them before the problems escalate. A ‘no blame’ culture and informal staff forums will help uncover issues before they even happen.
About the author
Donna Sewell is CEO of Legal Edge, a cost-effective commercial legal service especially for SMEs, with a team of flexible lawyers who all have worked with businesses before. Donna and her team help SMEs manage their legal strategy, process and budgets better.