Smart companies save money by avoiding costly litigation

In difficult or uncertain economic times, decision-makers often spend time looking for “big fix” answers when, in fact, a series of lesser steps might bring more immediate relief.

One such small but important step toward solvency is minimizing your company’s exposure to a lawsuit, and especially embracing alternative dispute resolution as a problem-solving method.

Litigation is rampant in America. Court costs, attorney fees, insurance premiums, payments to claimants and other litigation-related expenses are costing American businesses as much as $179 billion a year. Experts say Maine’s share of these national losses could be $350 million to $500 million or more.

Smart companies are doing everything they can to review policies and controls and scrutinize internal procedures to avoid lawsuits. Many are hiring professionals, such as CPAs, to help identify issues and plan risk management strategies before a manageable problem becomes a legal conflict.

There are things you can do to protect your business from costly litigation:

. Make fair dealings a part of your corporate culture.

. Include ethical practices in your mission statement.

. Promote and reward ethical behavior by your employees.

. Affirm your commitment by living your own mission as the leader.

. Monitor contract language carefully.

. Hire a professional to analyze all contracts and those being considered. Experts will be able to identify problems and issues you never even thought of.

. Don’t be afraid to share your concerns with an objective third party and seek help. If you suspect a problem exists (such as missing funds or documents), don’t hide under the rug because you are fearful of the consequences. Consult with an expert at your earliest concern. Things can get worse if you avoid timely action.

. Review your human resources procedures at least annually, and pay close attention to how they are managed and communicated to your employees. Even a small company can benefit from fair-minded and aggressively pursued human resources policies and procedures. Don’t wait for a complaint. Take action when you perceive issues, and address those issues promptly and fairly.

. Finally and most importantly, commit your company to a relationship with an organization that provides alternative dispute resolution, or ADR, especially a service that informally mediates a dispute before more expensive, complicated, and confrontational alternatives such as binding arbitration or litigation are considered.

One successfully mediated dispute between your organization and a customer could more than justify the expense of memberships or fees paid to an organization that provides ADR services.

Make it known to your customers and business associates that you are willing to mediate or arbitrate. Make your commitment to ADR a part of the language in contracts with your customers and associates.

ADR providers available to Maine companies include the Better Business Bureau of Eastern Massachusetts, which has an office in Portland, or (if you like to keep your cash here at home) Northeast COMBAT/Maine Center for the Public Interest. Both have business and professional membership programs. BBB memberships start at $410, and the COMBAT-MCPI rates start at $125 (both rates are for companies with one to 10 employees).

For BBB membership information, write Better Business Bureau Inc., 235 W. Central St., Suite 1, Natick, Mass. 01760-3767; call (508) 652-4800; e-mail info@bosbbb.org. or visit www.bosbbb.org.

For Maine Center for the Public Interest business and professional membership information, write COMBAT, 109 State St., Bangor 04401; or (information only, disputes are not as yet accepted at the following) call 947-1760; e-mail ProtectMaine@aol.com; or visit www.consumerprotect.org (under construction) and click Maine on the map.

One pesky lawsuit or threat of suit that doesn’t even justify an attorney’s time can ruin your day. Loss prevention is the smartest course.

Consumer Forum is a collaboration of the Bangor Daily News and Northeast COMBAT/The Maine Center for the Public Interest, Maine’s membership-funded nonprofit consumer organization. For help or to request individual or business membership information write: Consumer Forum, Bangor Daily News, P.O. Box 1329, Bangor 04402-1329.