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McCreary & Stockford, L.P.
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Introduction: Avoid
Problems with Preventive Law
Smart business owners and managers
reduce costs and avoid legal problems with preventive law practices. With the
appropriate legal counsel, businesses can avoid disputes, injuries, and damage
claims and can help strengthen their defenses when lawsuits are unavoidable.
This article will introduce you to
the value of legal checkups, legal handbooks, contract strategies and
litigation strategies. An attorney will help you to adopt the strategies that
apply to your business. Preventive practices are almost
always much less expensive than legal problems down the road. Legal Checkups Detect
Problems
Legal checkups or legal audits are
similar to an accountant's financial audit or a physician’s medical
examination. During a legal
checkup, an attorney examines business records and practices and recommends
steps that you can take to protect the legal health of your business. In a
typical legal checkup, an attorney will review documents such as your
corporate charter, bylaws, corporate minute book, purchase order forms, sales
contracts, employment agreements, and loan agreements. Afterward, you may
receive a written report summarizing findings and recommendations. An audit
may uncover legal problems that should be corrected. For example, it may reveal that the
company should revise sales contracts to limit warranties and liabilities or
revise its employment applications to preserve the right to terminate
unsatisfactory employees. In
addition to a written report, an attorney can meet with you to explain the
audit findings and recommendations and advise you on how to avoid potential
legal problems. At the meeting you can also learn which problems need
immediate attention and which ones are less serious. Legal Handbooks Ensure
Compliance
Legal handbooks inform business
owners and managers about the laws governing their day-to-day activities and
help companies comply with state and federal regulations. They usually
summarize the law and contain compliance checklists. Compliance failures can
result in bad publicity, distracting lawsuits, and costly fines. An attorney
can recommend inexpensive legal handbooks that are available from local
bookstores. A typical handbook is
about 100 pages long and provides practical guidance on how to comply with the
law. Some handbooks concentrate on one legal subject, such as legal
restrictions on product pricing, while others cover several subjects. The most
popular legal handbooks cover areas that can be hazardous to a company's legal
health such as compliance with antitrust, consumer protection, labor, and
product liability laws. The
handbooks are intended as reference guides to be kept handy on desktops and
credenzas. Some companies distribute legal handbooks to all employees, while
other companies limit distribution. Contracts Prevent Legal
Problems
Contracts provide an important
opportunity for you to prevent legal problems. An attorney can help you to
negotiate contracts that will protect your rights and help you avoid disputes
with your suppliers and customers. For
major equipment purchases or when buying a business, an attorney can help you
prepare a letter of intent that avoids unintended liabilities. Letters of
intent are frequently used when negotiations are just beginning and are used
to document the basic terms of the business deal and to simplify further
negotiations. A carelessly drawn
letter of intent can subject your company to damaging lawsuits. It is
important to consult a lawyer before signing a letter of intent to protect
your bargaining position in later negotiations.
After negotiations have been completed, it is important to carefully
prepare and review contract documents to confirm that they reflect the
business deal. It is also important that the contract documents cover
contingencies that may not have been discussed during the negotiations. At a
minimum, the contract should contain "preventive" provisions like
remedies for default, procedures for handling disputes, provisions limiting
your personal or individual liability, and provisions indemnifying your
company against injury and damage claims. An attorney lawyer can help you to
review your important contracts and contract forms to assure that they protect
your company against legal problems. Other Legal Strategies That
Minimize Litigation Risks
An attorney can help you take steps
to reduce the likelihood of lawsuits and win lawsuits that are unavoidable. To
help you avoid lawsuits, an attorney can recommend various procedures to be
followed by managers as well as rank-and-file employees.
An attorney may either undertake the company-wide legal checkup
mentioned above or just concentrate on areas that present the greatest legal
risks, such as the hiring of employees and the sale of goods and services. Other procedures protect your
company when disputes are unavoidable. For example, an attorney can help your
company adopt proper procedures for receiving and processing legal documents.
An attorney can also provide you with checklists of "do's" and
"don'ts" for handling disputes. Checklists can be prepared for
various situations including when a business deal goes sour, when an employee
is injured, when a customer complains about a product or service, or when a
government investigator calls the company. Spotting Legal Trends
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