Sitting on court documents
Strict time limits apply to court documents. There can be drastic consequences, for example, failing to respond to a creditor’s statutory demand in time automatically leads to a presumption that the company is insolvent. Don’t leave it until the day before a deadline expires to talk to a lawyer because it may take them some time to get enough information to respond on your behalf.
Most small business owners prefer to focus on what actually makes their business grow and operate, rather than dwelling on past mistakes or analysing small administrative details. Sometimes being sued can be about small details that happened in the heat of the moment. Try to keep a level head about what the other side is demanding.
Not recognising that almost all litigation has some degree of risk
Businesses are often reluctant to spend money to settle claims early when they see themselves as having done no wrong. Commercial disputes are rarely one-sided. Where the parties disagree about what happened, the judge may only need to be persuaded that one side’s version of events is more credible for that side to win. Failing to acknowledge that risk when you decide whether to defend a claim or settle it at an early stage can prolong disputes and increase legal costs considerably.
Not recognising the cost to your business
Defending proceedings can be an exceedingly time consuming and expensive distraction from growing your business. Although the courts may sometimes order a plaintiff to provide security for your costs in defending the claim, this may not always be appropriate in every case. Sometimes litigation is unavoidable (for instance, where settling would involve too high a cost for the business). However, you need to recognise that spending that time and effort defending the claim may result in a far higher cost to the business than you could have resolved the matter for if you had paid the plaintiff at the outset and decide if it is worth it.
If you are sued, knowing when to defend proceedings or when to settle can be a hard decision, but the team at Harris Freidman Lawyers will help you assess the facts and advise you about your options. Contact Scott or Fiona on 9231 2466 for more information.
- Part 1- Common Mistakes for Small Business Owners
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