Summer Time Civil Litigation: 5 Ways to Avoid Civil Litigation

Civil Litigation in Los Angeles is on the arise again. Most businesses tend to dissolve in the summer months. Here are some tips on how to avoid this stressful and expensive scenario:

1. Have your contracts reviewed by an attorney: This is especially if your attorney did not draft the original business agreement. Make sure you are protected should the business need to be dissolved. A bad dissolution can cost upwards of $40,000 in legal fees for the business owner. This does not even include other fees such as: personal representative, court fees, mediation fees, and your time spent. This summer we are offering a free initial consultation for business owners who want to review their contracts.

2. Make sure that you and your partner sit down together and discuss all your options should your business need to be dissolved: Strangely, many business owners do not plan for the sale and/or dissolution. There are many tools that can be used to help facilitate this issue: buyout clauses, buy-sell agreements, and other forms to planning necessary.

For Example, If one partner were to die, then the surviving-spouse would inherit the 50% share of the business. This also includes all of the business responsibilities the deceased had. Like check writing for example. If the spouse was not on hand to write checks, the business would come to a stand still. Another problem, would be that the spouse rescind her power to check write, and give the partner free reign to write checks without her approval. Neither of these situation are appealing and could easily destroy or cripple a business. A simple buy sell agreement could be in place to generate funds to "buy out" the surveying spouse and ensure the business transitions smoothly.

3. Make sure that all agreements are in writing and backed by legal paperwork. And you know where it is. This seems obvious, but you would be surprised on how often there is a lack of paperwork to support a case. Make sure everything is documented, and you have a safe and secure copy of it.

4. Pre-Litigation Mediation and Arbitration: If dissolution seems inevitable, attempt to settle out of court through Mediation or Arbitration. Parties agree to settle their disputes by mediation or arbitration by talking through their problems in-front of an objective third party. Mediation and arbitration is less expensive and less time consuming than going to trial.

5. Independent Audit of Books and Records: In most partnerships, one partner controls the books while the other takes a passive role. This scenario often leads to a dangerous situation. To solve this issue, most companies would benefit from an independent audit of the company's finances to make sure that no partner is taking advantage of the other.

Ryan Mosqueda
Legal Assistant