Protect Yourself from Business Lawsuits: An Employee's Guide to Avoiding Workplace Liability

by Thomas A Schweich

Overview

THE ESSENTIAL BOOK EVERY EMPLOYEE NEEDS TO AVOID WORKPLACE LIABILITY
Corporate litigation has spun out of control and can cost up to 10 percent of overall earnings. Changes in the law enabling lawyers to mount business tort claims have caused damages to soar sky-high. In this groundbreaking book, Thomas Schweich, a pioneer in the field of preventive law, turns the tables and offers managers and all employees who act as agents a manual for avoiding the mistakes that could land them in court.
In comprehensible layman's terms, Schweich shows employees from companies of all kinds and sizes how to avoid lawsuits by analyzing the Eight Big Mistakes that can lead to litigation, with examples culled from his experiences at Bryan Cave, LLP, leaders in preventive law.
This book will benefit all employees — from the CEO of a major corporation to the average deal-making employee. An invaluable tool for avoiding workplace liability, Protect Yourself from Business Lawsuits is a must-read for every businessperson.

Product Details

ISBN-13:	9780684856551
Publisher:	Scribner
Publication date:	03/02/2000
Edition description:	Fireside ed.
Pages:	224
Product dimensions:	5.50(w) x 8.50(h) x 0.60(d)

About the Author

Thomas A. Schweich is a partner in the St. Louis office of Bryan Cave, LLP. His practice focuses on the negotiation, mediation, arbitration, and litigation of commercial and government disputes. He also conducts training seminars for corporate clients and trade groups on how to avoid lawsuits. A graduate of Yale and Harvard Law School, he lives in St. Louis with his wife and two children. For more information on preventive law, visit his Web site, www.tomschweich.com.

Read an Excerpt

Protect Yourself from Business Lawsuits

An Employee's Guide to Avoiding Workplace Liability

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By Thomas A Schweich

Scribner Paper Fiction

Copyright © 2000 Thomas A Schweich
All right reserved.
ISBN: 9780684856551

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INTRODUCTION: The Art of Suitproofing

Everyone knows that there are too many lawsuits in the United States. Small companies often sue one another into bankruptcy. A typical large company has over 450 lawsuits going on at any given time. Thanks to the litigation explosion, legal costs are now running at 5 to 10 percent of earnings for some of the nation's biggest corporations.

People blame this situation on trial lawyers. And for salaries of $300,000 a year, they gladly accept the blame. In fact, trial attorneys usually tell the best lawyer jokes.

The best solution to the litigation explosion will not come from trial lawyers. Nor should it. Most trial lawyers are just doing their jobs. Politicians do not have the answers either. Many politicians are lawyers, and those who are not realized long ago that you cannot pass legislation to make people act more reasonably about filing lawsuits.

This book will turn the problem over to the business community -- from the corporate CEO to the hourly employee, from the entrepreneur-turned-company-president to the small-business person. The vast majority of business lawsuits, and the cost and disruption that go along with them, would be avoided if employees at all levels, in businesses of all sizes, simply took control of the situation.

This is a how-to book. In manyrespects, it is as basic and methodical as a book on how to remodel your house. The book shows executives, managers, and other conscientious corporate employees how to keep their companies out of court. Owners and employees of small businesses will learn how to avoid jeopardizing their companies. Employees of large companies will learn how to increase productivity by reducing or eliminating the cost and disruption that lawsuits inevitably cause. Moreover, whatever the size of your company, by learning the techniques described in the coming chapters, you will greatly advance your personal aspirations as well as those of your company. Understanding how to avoid lawsuits will improve your business judgment and sharpen your negotiating skills.

More important, in today's pragmatic, results-oriented, and downright cutthroat environment, you could seriously hurt your career by not following the principles described in the following chapters. Companies are no longer tolerating employees who make the kinds of costly mistakes that result in lawsuits. So by educating yourself to avoid lawsuits, you will advance your personal interests as well as those of your co-workers.

Let's cover for a moment the structure I will use for teaching you how to stay out of court. Most books on legal topics are organized by disciplines as they are taught to law students. They are divided into subtopics such as contracts, real estate, torts, labor, corporate transactions, etc. But this book is not for lawyers, and it is not really about law. Rather, it is a practical guide for business people who want to avoid lawsuits. Consequently, it is organized in a much more user-friendly manner.

In fact, this guide to suitproofing your business is structured more like a book on remodeling your house than a book on law. If you are going to remodel your house, you follow three basic steps. First, you get the raw materials -- brick, plaster, and the like. Then you make the structural changes -- knocking down old walls, putting up new ones, and replacing fixtures. Finally, you apply the surface protection -- grouting, painting, refinishing, and tuck-pointing.

Avoiding lawsuits is an analogous process, so the book is also divided into three basic parts. Part One explains why businesses place so much emphasis on avoiding lawsuits these days. It provides the basic understanding or raw materials that company employees and independent business owners need to fully understand the increasingly dangerous ramifications of lawsuits in today's bottom-line business environment.

In Part Two, we shall make the necessary structural changes to your company by identifying, and enabling you to correct, the Eight Big Mistakes that employees make that cause their companies to have to go to court. We will cover the mistakes made in several potentially dangerous areas, such as performing contracts, dealing with competitors, designing products, handling difficult employees, and addressing the problems that can lead to government audits and investigations.

In Part Three, we will apply the surface protection that makes your company virtually suitproof. We will put up the Four Shields that will protect you and your company from lawsuits. These are preventive steps that you can take to help make your company legally impenetrable. By adopting these powerful defensive tactics, you will make your company an extremely unlikely target for lawsuits. If everyone at your company consistently applies these defenses, you will save money on lawyers, create a more productive work environment, and enjoy your work more -- all of which will add to your profits.

Before we start knocking down walls and refinishing floors, however, let's get the raw materials -- a basic introduction to recent developments in the legal profession that will put the growing importance of avoiding lawsuits into context.

Copyright © 1998 by Thomas Schweich

PART ONE: A System Out of Control

"Litigation" is a term that encompasses the lengthy process of filing a lawsuit, developing information about the other side's case, preparing the case for trial, trying the case before a judge or jury and, if necessary, appealing the verdict or judgment to a higher court.

More than ever before, both you and everyone in your company have a strong vested interest in avoiding this arduous process. If you own a small company, protecting yourself from lawsuits may even be the key to survival. During the next several years, corporations will value much more highly than in the past those employees who keep the company out of court. Employees whose actions embroil the company in litigation on the other hand will increasingly be shown the door. This chilling policy will hold true even if an employee caught in litigation is morally, legally, or ethically right. The mere fact of litigation will hurt and could destroy your company and/or your career because of the changing nature of business lawsuits.

There is a worsening stigma associated with corporate litigation. It was not always that way. Twenty years ago, employees and executives often sailed through successful careers despite frequent involvement with legal proceedings, even when the propriety of their own job performance was directly at issue. Recently, I was preparing a crusty senior vice president of a major corporation for a "deposition" -- pretrial testimony taken under oath. I asked him whether he had had previous experience testifying in legal proceedings. He smiled, looked down at me through his bifocals, and said, "Son, I've testified before four grand juries; I've testified in three civil trials; and I've had my deposition taken nine times." He was clearly proud of his litigation experience.

There is no doubt that in the "old days," weathering litigation successfully was a badge of experience, almost a rite of passage in many corporate cultures. The reason was simple. Litigation meant the company was tough and principled and that it would get what it was entitled to have. Trial lawyers and individual executives often earned the same reputation. The halls of major law firms are filled with senior trial lawyers who tell tale after tale of corporate executives who booted unruly competitors, subcontractors, or union representatives out of their offices -- often calling security to escort them off the premises while yelling a trial lawyer's favorite cliché: "See you in court!"

THE OLD ASSUMPTIONS ABOUT THE LAW: JUSTICE, LIMITS, FUNDS, AND LAWYERS AS FRIENDS

The outdated perception of corporate litigation as both noble and normal was founded upon four basic assumptions: confidence in a just outcome; well-defined limits on the scope of the litigation process; sufficient funds to pursue or defend a lawsuit; and a close, personal relationship between the company and its trial lawyer. In many, if not most, cases, these assumptions no longer hold true.

THE DECLINE OF JUSTICE

In the past, a company's willingness to test the propriety of its conduct in court was founded upon the belief that American courts deliver justice. At one time, there was faith in the corporate world that the judicial system was always fair. That faith has eroded, and rightfully so.

A company can no longer have faith that it will be vindicated or rewarded just because its conduct was legal, ethical, or within the bounds of its contracts. Some politicians and scholars like to blame judges for the problems facing the system, but not a single practicing attorney whom I interviewed had serious complaints about the fairness and competence of American judges. Indeed, the erosion of justice in business cases has virtually nothing to do with the quality of judges, or the judicial activism for which politicians and law professors criticize the legal system.

Rather, the problem is the sheer volume of cases in the court system. The American judiciary is overwhelmed. While the American judicial system remains the most just on earth, and American judges remain as a group the most incorruptible on earth, the system is simply too overloaded to ensure justice consistently.

Take federal trial courts, for example. The federal system had over 300,000 new cases filed in 1996, up from about 250,000 in 1990. That means that the typical federal judge was assigned 471 new cases. These cases were added to his or her already crowded docket of pending cases. That same judge completed just 27 trials.

The statistics speak for themselves: the judge simply does not have time for your case. Lawyers have gotten used to appearing in court on the same case before the same judge within a month's time and finding that the judge does not even remember the names of the attorneys, much less the clients or anything at all about the case.

When a successful attorney writes a brief in support of his or her client's position, often the first argument to the judge is not why the client is right but rather why the ruling sought is the most convenient one for the judge! Trial attorneys know that, like all people faced with an overwhelming amount of work, judges will often look for the easiest solution within the bounds of the law. If there is a safe way -- one that is legally justifiable and not likely to result in a reversal by an appellate judge -- to transfer a case to another judge, dismiss a case on a technicality, or enter summary judgment (that is, decide that a party wins without a trial), the judge will feel a lot of pressure to follow that course of action. If, on the other hand, the request made by an attorney requires the judge to hold a lengthy hearing or write a complex opinion, that attorney will often lose -- even if that attorney's argument was well reasoned, well written, and extremely expensive for the client.

Many judges will also pressure parties to settle cases, even when they know little if anything about the case. They push for a compromise that is worse than you want and better than the other side wants, sometimes with little regard for the facts or the law. They just want the case to go away, and often the litigating parties bow to the pressure. Their reasoning is that if you are just going to settle the case in the middle anyway (as happens with the vast majority of business cases), then why go through the entire costly and time-consuming litigation process? Why not settle it before the lawyers take their millions?

Most judges are conscientious and honest. The problem is that they will exhibit these qualities only during the two minutes that they have to address your case. That means that trying to obtain justice these days is always a very big gamble.

LAWSUITS UNLIMITED

Some lawyers like to compare corporate litigation to boxing. Like boxing, litigation is a tactical process of punch and counterpunch, punctuated with breaks. You can adopt a strategy of wearing the other side down or you can go for a quick knockout. However, the similarities between boxing and litigation end there. In boxing, the rules are simple. The entire WBF rule book is only twenty pages long. And the rules are strictly enforced by the referees and the boxing commission. In boxing, the simplicity of the rules combined with their strict enforcement means that the event is well controlled.

In litigation, however, the rules are much more elaborate and continue to grow (the federal rules were 266 pages at last count), but they are not consistently enforced. The increasing complexity of litigation rules combined with decreasing consistency in their enforcement means that the once-clear limits on the scope of lawsuits have given way to a free-for-all. We have already seen that the referee in litigation, the trial court judge, is trying to cover several hundred matches at once. That means that a lot of low blows go unnoticed. Indeed, there are a whole series of litigious tactics that are against the rules, but, as many lawyers know all too well, are not serious enough in isolation to warrant the attention of the judge. In my own practice, I have seen lawyers get away with lying about whether they had access to witnesses, failing to produce relevant documents to the other side, backdating important documents that were late, and committing many other similar ethical offenses -- even though they were caught redhanded. Many lawyers know just how far they can go before a busy judge will come down on them, and they get away with violation after violation of the rules of litigation and professional ethics. These actions offend and disillusion the majority of lawyers and clients who play by the rules and further undermine the perception that justice is served in our system.

Changes to the law itself have also expanded the limits of litigation. Business disputes used to focus on the terms of the contract between two parties. Over the past several decades, however, courts have increasingly accepted nebulous "business tort" causes of action -- lawsuits claiming allegedly intentional wrongdoing by companies in connection with the performance or termination of business agreements. Claims for fraud, "unfair competition," and interference with business relationships can now be pursued on very flimsy facts, and, when an unscrupulous lawyer is involved, they often go forward on mere speculation. Because these "tort" claims are so unclearly defined in the case law, few judges will step in to prevent such cases from advancing.

The result is a number of gaping loopholes in our system of justice that allows litigation to spin out of control. As we will discuss in detail later in the book, lawyers representing small companies have learned how to inflict a lot of pain on big companies by transforming traditional contract disputes into "tort" disputes involving allegedly malicious acts, allowing them to seek huge sums in punitive damages. These claims artificially increase the value of what used to be a basic, bound-and-limited contract case. I recently read about an unscrupulous lawyer who amended his $2 million contract claim to add a $15 million tort claim by fabricating allegations that the big company maliciously breached its contract for the sole purpose of putting his small client out of business. The judge did not have time to read the evidence showing the complete lack of malicious intent. "We'll let the jury decide," he said. So, although the evidence was in its favor, the accused company had to contend with these vague and unsupported allegations.

Other changes in the law have worked to the benefit of big companies that sue small companies. For example, the rules regarding "discovery" (pretrial exchanges of information and testimony) are becoming increasingly liberal. There is almost no way to limit the access that another side has to your people and documents. More often than not, the other side will take numerous depositions and demand all kinds of marginally relevant documents, forcing you to undergo a massive, expensive, and inconvenient process of reviewing and copying files.

Lawyers defending big companies can often force small companies into submission by posing these broad and burdensome requests for documents and by asking for depositions from almost everybody who ever worked at the company (including, for example, former employees living in Malaysia). This increases the expense of litigation for the small company to an intolerable level.

One game both sides play with discovery is to scour the documents produced by the other side and find the highest-ranking executive mentioned in them so that they can harass that person -- though he or she usually has virtually no knowledge of the case -- by taking his or her deposition for several hours. That means that if you do something to get your company into court, it is more likely than ever that your boss will be dragged into the mess, and so will his or her boss, and that person's boss, on up the line. In preparing your senior executives for their depositions, the company's lawyer will have to tell those executives all the nasty things that the other side is saying about you. Not great for your career advancement. The same high-level executive who once might have said to the other side, "See you in court!" is now asking his own people, "Who in our company screwed up?"

Throughout all of this, the question of which company was right and which was wrong goes by the wayside. Legal tactics become much more important than the search for justice.

Perhaps it sounds as if lawyers should bear the blame for the unbounded scope of litigation. Maybe. But you also share the burden. Remember that no case is decided by a lawyer. Most cases are not decided by judges either. They are decided by juries -- normally nonlawyers like your hairstylist or car salesman. And juries have also changed over the years. First, they get to hear more than they used to because the law is unclear, the judge is too busy to address motions to keep a lot of the nonsense out, and the lawyers try as hard as they can to get questionable evidence into the courtroom. Second, in this era of sensationalism, when emotion seems increasingly to triumph over reason, juries have become less predictable. They often award huge damages for minor infractions; they may ignore evidence if they like the defendant, and they also seem to be more easily manipulated than they once were by lawyers who arouse their sympathy or strike their fancy. And, most unfortunately, there is increasing racial polarization, which could result in an unfair result for your client depending upon whether your key witnesses are black or white and whether the jury is predominantly of one race or the other.

The result of larger dockets, broadening causes of action, liberal rules of discovery, unscrupulous lawyers, and unpredictable juries is what I call the "arbitrary factor." The arbitrary factor is the chance that you will win or lose a case on issues that have nothing to do with the merits of your position. In my opinion, the arbitrary factor is on average about 20 percent. In other words, the arbitrary factor states that no matter how good your case may be, there is never more than an 80 percent chance that you will win.

Consequently, any lawyer who tells you your case is a sure winner is lying to get your business. On average, a good case means you have about a 60 percent chance of winning and a great case means your odds increase to about 70 percent. Only the best case imaginable represents about an 80 percent likelihood of victory. The arbitrary factor must be put into the equation before you decide whether to go to court and before you draw the line and let the other side sue you. It is the reason so many "sure winners" settle at the last minute, after the lawyers have lined their pockets from your corporate treasury. Again, you should consider the arbitrary factor before you go down the path of litigation rather than at the courthouse steps.

SPIRALING LEGAL COSTS

Companies bleed money. They hurt when they spend money and get no return on their investment. Most litigation results in a lot of bloodletting for both sides. A complex business case may go to trial as late as three to five years after it is filed. Once one side obtains a judgment, the appeals process will last one to two years. Ultimately, in most cases, one side (the loser) gets no benefit for its substantial investment, and the other side (the winner) gets some return after four to seven years of sinking money into the case without a return.

Amazingly, the cost and disruption of winning a case can near or even exceed the value of the judgment obtained. I recently heard of a large company that had sued another large company and obtained $4 million. Sounds great. Unfortunately, the legal fees were $8 million. In most cases, corporate litigation is an open wound for the companies involved, and, based on my observation and experience, in at least one third of all cases filed, both parties lose even if one party technically wins.

The financial wounds caused by lawsuits are much deeper than they once were. With clogged-up court dockets, fewer rules, and more unscrupulous tactics by lawyers, it is going to cost your company a lot more than it once did to prosecute or defend a lawsuit. Further still, money matters now a lot more than it once did. Money always mattered, you say. Not true in litigation. Back when corporations were run less leanly than they are today, most companies did not even have a mechanism to monitor legal costs. Money for lawyers came out of the general funds of the corporation and was not carefully tracked. Into the 1980s, it was common for law firms to send their clients an unitemized bill which simply stated, "For Services Rendered..." followed by a dollar figure. Clients paid these bills because they had faith in the system and because the fees looked reasonable.

There are a lot of theories as to why companies started paying attention to legal fees. The steady increase of fees themselves was one obvious reason why corporations took note of legal costs. More broadly, however, it was the tumultuous business cycle of the 1980s that caused companies to fully grasp the amount of money they were wasting on lawsuits. The greed of the mid-1980s led to a lot of reckless business deals, followed by a lot of protracted lawsuits, followed by an economic downturn that hit before the lawsuits were resolved. Executives who had been throwing money around on frantic and ill-advised business ventures and who thought they could get out of them by throwing money at lawyers were replaced with a new generation of downsizers and cost-cutters.

The "slashers" put pressure on their lawyers to itemize their bills. They also required that lawyers provide litigation budgets to the company, against which performance was closely tracked. The new generation of executives considered lawyers to be an exorbitant cost that the company should incur only in the most extraordinary and carefully considered situations.

Today, the financial officers of every major company as well as most smaller ones carefully monitor the costs of litigation, and they do not like what they see. Managers at small companies know that the costs associated with pursuing or defending even a single lawsuit can wipe out profits and that the bad press associated with one nasty legal battle or government investigation can dry up the customer base and literally put the company under.

As for larger companies, a 1997 corporate survey showed that companies with revenues of $1 to $2.5 billion employed on average fifty-three law firms and generally spent $3.5 million per year on outside counsel alone.

A different 1997 survey of companies with sales of $10 to $20 billion annually placed their median legal spending at over $40 million, with almost $21 million of that sum spent on outside counsel. The third quartile of such companies averaged over $63 million in annual legal expenses, of which $32.8 million was spent on outside counsel. The median companies on average employed 250 law firms in a given year. A great majority of the outside costs were related to litigation. In fact, the typical large corporation surveyed had over 450 active cases in the survey year.

Legal costs come right off the bottom line. In the old days, when fees were unmonitored and paid from general revenue, these costs went unnoticed because they were relatively low when compared to the overall revenue of the company. The new breed of corporate management, however, realizes that these expenses hurt the company badly. They compare legal costs to earnings, not to revenue. In the very first paragraph of this book, I noted the figure that legal costs sometimes take a 5 to 10 percent bite out of the quarterly earnings sheets of large companies -- a fact no financial officer likes. And while there are no statistics available for small businesses, experience indicates that the cost of one lawsuit can turn otherwise profitable sailing into a tumultuous sea of red ink.

Moreover, legal costs include more than legal fees. The actual cost of litigation is much greater than the mere $250 per hour charged by a decent trial lawyer. The surveys do not take into account the money lost from the delay and disruption caused by depositions of company personnel and the incessant ransacking of corporate files. And don't forget the $1,000 per day charged by "expert witnesses" who are hired to prove technical points or damages, and you are talking some real money.

Further still, in most cases in which over a million dollars is at stake, the company will assign one or more of its employees virtually full-time to the case. For large cases, it is not unusual to have an in-house litigation team of ten or fifteen people, and I once worked on a case where the in-house staff alone was comprised of over fifty employees. The assignment of company personnel to lawsuits diverts valuable resources to activities other than making products or providing services to customers. Moreover, the in-house litigation team is sometimes made up of the people who got the company into the mess, so being a member of such a team may be no honor and can be detrimental to your career, as well as to the company.

YOUR LAWYER, YOUR FRIEND

Until the early 1980s, top executives very often had a close relationship with the partners in a particular law firm. The senior partner may have incorporated the company; that same lawyer may have had a seat on the company's board of directors, and probably played golf with the CEO on a regular basis. The company and the law firm grew together. Often there were even family ties between corporate founders and their law firms. The social relationships between the company and its lawyers meant that company employees often worked with the boss's friend.

While many companies today maintain close professional ties with law firms, and individual lawyers may have strong social connections with company executives, the statistics on corporate legal expenditures cited earlier show that the practice of using only one law firm has fallen out of favor with most of corporate America. Just as companies instituted itemized billing and project budgeting to reduce costs, they also determined that they could lower expenses by the oldest cost-cutting strategy in existence -- competition. Most large companies not only use many law firms but they are not shy about letting firms know that their fees (and their performance) will be closely compared to those of other firms. Some companies even have what law firms jadedly call "beauty contests" in which several firms are invited to make a bid for a particular case.

Law firms have responded by aggressively seeking new business and trying, albeit tacitly, to convince potential corporate clients to let go of their current lawyers. And, of course, there is now legal advertising on every medium from TV to billboards.

This type of competition among lawyers was unheard of twenty years ago. In fact, at that time, the legal profession severely limited a lawyer's ability to market and advertise his or her services. That made it more difficult for companies to learn about their options. Now competition is the rule in the legal profession, and clients have embraced it.

The changes in the way legal services are procured are significant to employees who become involved with litigation. Outside lawyers are now truly outsiders. They are less likely than ever to be perceived as part of the corporate team. At best, executives view lawyers as just another subcontractor; at worst, they consider them to be a major disruption. This alteration in attitude has removed what little glamour there once was for corporate employees affiliated with litigation. When lawyers walk in the room, they are perceived as a necessary evil; when you walk in with lawyers, you may be perceived as an unnecessary evil.

THE LESSON OF LEGAL HISTORY

As I have discussed, recent changes in the law make it imperative for corporate personnel to avoid litigation because they can no longer be assured of a just outcome. In addition, today's tactics are disruptive and disillusioning, the costs of litigation are skyrocketing, and mere association with litigation can have a negative impact on your career.

There is another reason why staying clear of lawsuits is more important than it once was: cost-reduction efforts such as itemized billing, competitive bidding, and up-front budgeting are not working as well as companies had hoped. Litigation costs, which burgeoned in the late 1980s, have remained high even in the days of budgeting and "beauty contests." They continue to drain corporate treasuries because the savings achieved by the methods mentioned above do not effectively offset cost increases caused by the backed-up court system and the dilatory tactics condoned by the law and practiced by some lawyers.

Costs continue to climb because lawyers are very good at getting a new client by proposing a low budget based on optimistic assumptions. As the case proceeds, however, the assumptions underlying the original budget often change (which is often unavoidable, given the inherently unpredictable nature of litigation). Ultimately, the firm ends up billing the client for a sum greatly in excess of the budget that got it the case. If, as a result, the firm loses the client, it is less likely to be as big a deal for the law firm as it once might have been -- long-term relationships may be a thing of the past, and the firm will simply prepare for the "beauty contest" with the next company.

Companies are now beginning to realize that the only effective way to lower the cost of litigation and end the disruption it causes is to avoid it entirely. The concept is just starting to reverberate through corporate law departments, executive suites, and offices of small business owners. The goal for the next century is to structure transactions so that they do not result in disputes, and to resolve disputes so they do not result in litigation. In the next chapter, I will show you how to take big steps in that direction.

Copyright © 1998 by Thomas Schweich

PART TWO: The Eight Big Mistakes

For ethical reasons, I must start with a self-evident bit of advice for avoiding litigation: do not commit legal infractions, and pay up if you do. The reason I make this obvious point is that the techniques for preventing lawsuits discussed in the following pages will help you stay out of court even if you really are liable.

It is not, however, the objective of this book to help guilty parties. In fact, some litigation could be prevented if a guilty or liable party would just admit it, pay some restitution, and move on. Occasionally, I hear or read about a company that knows full well that it has broken a contract or discriminated against an employee. But the company decides to rely on the arbitrary factor or its superior resources, and it lets a matter go to litigation, knowing all the while that it is liable. In such a case, the company will usually test the resolve of its opponent by going through the early discovery stages of a lawsuit, but as the case approaches trial, the liable party will become concerned about a big jury award or judgment. The case will then be settled.

In other cases, a company or individual knows it does not have a case but files one in hopes of being a nuisance and extorting a settlement. In fact, there are a lot more worthless lawsuits out there than there are clear winners. Most defendants do not succumb to being manipulated by a fabricated suit, and they may even take retaliatory action against the party that fabricated the claim. The case is usually then dropped.

However, it may surprise you that cases with an obvious or absolute truth are actually quite rare. In 95 percent of business cases, both parties honestly believe that they are right. From the depths of their hearts, one side calls the other side a bunch of sleazebags, losers, and cheats while the other side is saying exactly the same things about the opposition.

The fact is that absolute truth is quite rare. Our perception of events is colored by our unique frame of reference: our family background, our education, our employment history, the corporate culture of our employer, and the extent of our involvement in the particular transaction at issue. This means that you can legitimately perceive a set of facts one way while I legitimately see them another way.

These gray areas of perception have a simple name: disputes. This part of the book is designed to help you avoid the major mistakes that either cause or perpetuate disputes. Some of the mistakes addressed cause disagreements. We will learn how to avoid mistakes that incite disputes. Other mistakes make your case worse after a dispute arises. I will show you how to ensure that your witnesses and documents support your position. That can be powerful negotiating ammunition that lessens the prospect of litigation and that might increase the chances of a quick, favorable settlement. Still other mistakes cause litigation to broaden in scope or lower the likelihood of a negotiated settlement once a lawsuit has already been filed. By avoiding the Eight Big Mistakes that follow, you will keep your company out of court most of the time, and, in those few instances when you do go to court, you will usually get your company out of court quickly with the best results.

Based on my personal experience handling dozens of major and countless minor business disputes, in addition to interviews and a lot of reading, here are the Eight Big Mistakes that get and keep companies in court:

1. Bad Writing: Not knowing when to write and how to write are hauntingly recurrent mistakes that result in corporate lawsuits.

2. Bad Estimating: Not properly assessing the time and resources that you, or another party, need to complete a job is like paving the way to the courthouse.

3. Speculation: Talking or writing about something that you are not qualified to discuss is often a million-dollar mistake.

4. Bad Research: Hiring or doing business with the wrong person or company can get you into court no matter how well understood or well written your agreement is.

5. Ignoring Problems: Problems do not just go away, and ignoring them frequently converts minor business mistakes into actual criminal conduct.

6. Getting Personal: One emotional memo or outburst can mean a big jury verdict against your company.

7. Side Deals: Informal agreements that go against your contract are like litigation viruses.

8. Misusing Your Power: At the time you are most invincible competitively, you are most vulnerable legally.

This list gives you an overview of the major causes of corporate litigation. Interestingly, the same mistakes seem to occur in companies of all sizes regardless of what product or service they offer. Keep this list in mind as you go about company business and you'll go a long way toward avoiding the Eight Big Mistakes and minimizing their impact if they do occur. Now let's analyze each of these mistakes.

MISTAKE NUMBER 1: BAD WRITING

TO WRITE OR NOT TO WRITE

A Fortune 500 company once spent a lot of money printing up notepads that had the following corporate motto on the top: AVOID ORAL ORDERS. Someone had decided that it was good business practice to put everything in writing. That person was, apparently, not the CEO. When a law firm interviewed the CEO for a case, the CEO boasted, "I never write anything down. That's how I stay out of trouble." He did not know, however, that his employees were being told to write everything down.

Unfortunately, neither the motto nor the CEO got it right. If you write everything down, then, of course, you record every mistake, miscalculation, problem, or idle thought you ever had. Many people do. And you cannot believe how badly an unartfully drafted critique of your company will come off to a jury. They will not know that you were kidding when you wrote, as a corporate employee once did: 'We all run around like chickens with our heads cut off; hello, will someone bring order out of this chaos of incompetence?" The other side's lawyer must have parroted those phrases a hundred times during the lawsuit, "in their own words, they were chickens with their heads cut off -- that means brainless and disorganized" and "they never got that order out of chaos of incompetence, did they?" Never mind that the company had done a good job on the contract in question; a few careless words haunted that company for three years.

But the CEO (or any other employee) who does not write anything down often faces worse consequences. He or she looks either incompetent or downright dishonest. If a top executive has no record of a meeting related to an important transaction, a good lawyer can make that executive look careless or maybe even devious. More important, I have seen cases where the noteless CEO's memory was directly contradicted by notes taken by the other side's CEO. Juries will believe contemporaneous notes over someone's memory. Not taking any notes has made many important business people with bad memories look like downright liars.

People want hard-and-fast rules and easy answers. So they come up with oversimplified slogans to write everything down or never write anything down. Unfortunately, easy answers usually result in big problems. At the outset, however, I suggest that you adopt a couple of basic assumptions. Whenever you contemplate writing something down, assume that it will be read by twelve jurors who do not know you and who do not know your company. Assume moreover that one typical juror is a lot like your favorite uncle or grandmother. And assume further still that those twelve people will hear a creative interpretation of what you wrote from the opposing lawyer who is paid a lot of money to put the worst possible spin on it. If what you plan to write will not find favor with the unknown twelve people, the juror like Grandma, and the nasty lawyer, keep the thought in your head and don't put it on paper.

FALSE SECURITY

INTERNAL vs. EXTERNAL DOCUMENTS

Employees tend to be less careful about what they write in internal documents such as memos, notes, and minutes than they are with external documents such as letters and advertisements. The main reason employees have a lower standard of care for internal documents is that they do not think anyone outside the company is ever going to see them. The common question I hear is the following: how can a document result in a lawsuit if, as in the case of an internal company document, the other side does not have it?

Internal documents cause litigation for three reasons. First, the other side may in fact have them. In some of the most common business cases, such as whistle-blower suits, wrongful discharge suits, and suits involving "noncompete" agreements, the other side is usually a former employee who may have been storing up all of your internal memos for months before he or she left your company. Then the employee hands those documents over to his or her lawyer and a lawsuit is born. As a matter of fact, if criminal conduct is alleged -- mail fraud, procurement fraud, health care fraud -- a simple tip from a current or former employee may get federal investigators involved. Then, if you are "lucky," you will be served with a government subpoena for all your documents, which often leads to the commencement of civil or criminal enforcement activity. If you are unlucky, you'll get raided by law enforcement agents with a search warrant and your internal documents will be carted out in boxes. It sounds draconian, but it happens to companies across the country almost every day. Internal corporate documents have in fact instigated many legal proceedings.

In more typical civil cases such as breach of contract cases, the other side will not get your internal documents until after the lawsuit is filed. In such cases, internal documents will not be the cause of the litigation. The documents will, however, have to be produced soon after the litigation starts as part of the discovery process. Any business litigator will tell you that one of the main reasons litigation lasts so long is that usually both sides find poorly written, incriminating documents that the other side has generated. Each side then produces the other side's bad documents during depositions and any settlement discussions, thus greatly protracting the process.

Most important, if you follow the basic process outlined below for making both internal and external documents suitproof, your company will get the reputation, as some already have, of a company that cannot be beaten in litigation. That is the most powerful lawsuit deterrent of all. You, therefore, have a compelling reason to make sure that your internal documents are written with the same high level of care as your external documents.

COMPANY PRIVATE DOCUMENTS

Some people believe that they will get some sort of protection by marking a document CONFIDENTIAL, SENSITIVE, or COMPANY PRIVATE. Wrong. In fact, documents with such markings usually backfire on you in litigation. Normally, your obligation under the rules of litigation is to produce all relevant documents (other than those relating to advice of counsel) for the other side, and that includes documents marked CONFIDENTIAL, COMPANY PRIVATE, etc. Courts have even developed procedures for allowing parties to review government-classified documents. Marking something SENSITIVE gives you no legal protection whatsoever.

Indeed, the lawyers for the other side just love to wave your CONFIDENTIAL, SENSITIVE, and COMPANY PRIVATE documents at the jury because the markings make it look like your company has something to hide. I have seen lawyers use these documents as evidence of all kinds of crazy plots, and jurors will believe them. As far as a trial lawyer is concerned, marking a document COMPANY PRIVATE is equivalent to marking it "here's the juicy document that has all of our bad intentions in it." And those big multicolored CONFIDENTIAL cover sheets that sometimes go on top of sensitive documents will really wake up the jury, giving them cause to imagine all kinds of evil intentions on the part of your company. Think twice before putting such self-important, legally useless markings on your documents.

Indeed, the only really useful markings are for documents that contain company proprietary information, such as secret technology or financial data. Such documents should contain applicable patent, trademark, or copyright notices. Otherwise, these documents should be marked simply PROPRIETARY. You will probably still have to produce them for the other side, but a court will provide you with protection against the misuse or public disclosure of the information contained in these documents.

SPECIFIC TYPES OF DANGEROUS DOCUMENTS

The following types of documents frequently show up in court as exhibits because they tend to be the most poorly written.

E-MAIL

What people put in e-mail is amazing. Consequently, e-mail (including cc-mail) has become exhibits A, B, and C in many business lawsuits. Every e-mail you write or see that relates in any way to the case is fair game. The other side gets them all.

The reason e-mail has become such valuable evidence for the other side is that people exercise even less caution when they write e-mail than when they write other corporate internal documents. Email is informal and easy to send to anyone. Also, e-mail seems almost anonyamous since you do not actually have to face the person to whom you are sending it. Consequently, people do not think too hard before they write an e-mail; they certainly do not write second drafts. They just type and click, type and click. And, depending upon what kind of computer system your company has, it may be impossible to erase whatever you put into an e-mail. Even after you "delete" an e-mail, it often finds a home out in cyberspace and remains forever retrievable.

It is the informality of e-mail that makes people so careless in what they write. That built-in carelessness is unfortunate; it would seem that people would be most cautious when using a medium that involves quick interchanges of information and almost unlimited accessibility. As a responsible corporate employee, you must raise your level of caution for e-mail to match that of any external correspondence you generate.

MEETING MINUTES

Meetings are also a common cause of litigation because almost by definition, they involve the reconciliation of opposing viewpoints. Meeting minutes concretely record differences. Differences may be noted even if a consensus was reached to resolve the issue at hand.

Internal company meetings present different risks than meetings with other companies. When you are dealing with other parties, rest assured that they will write up minutes that are slanted to their interests -- sometimes vastly so. I have on several occasions had the opportunity to compare my opponent's "draft" meeting minutes with the final minutes agreed to by the parties. The first thing I have noted is that people often try to alter the minutes to reflect something that they wish they had said in the meeting, but did not. I once caught someone adding to the second draft of some minutes language to the effect that my client had agreed to do a whole lot of extra work at no cost. It later came out that the parties had not even discussed this at the meeting!

Consequently, when meeting with other companies, always ask whether they intend to keep meeting minutes, and, if so, request a copy. When you receive the draft minutes, read them carefully, and promptly put any exceptions that you have in a letter to the other side.

Better yet, volunteer to be the party who writes up the minutes, and furnish the other side with a copy if they ask for one. There is a tremendous tactical advantage to being the party that drafts the minutes, even if it does mean a little extra work. When you are responsible for the minutes, you are more likely to take better notes and to remember the meeting. Moreover, if the meeting becomes an issue, as the official minutestaker, you are instantly the most credible witness -- and the other side knows it. Being the principal drafter of minutes makes it likely that your version of events will be the official one. This will discourage the other side as it evaluates whether to take a dispute to court.

Minutes of internal company meetings, on the other hand, are of a very different nature. They rarely help in litigation. The reason is simple. When the dispute or issue that leads to litigation first arises, there is undoubtedly an internal company meeting or two (or twenty-two) in which the company decides what its position should be. And at one or more of these meetings, someone in your company is bound to express doubts about some aspects of the company's position in the matter.

Even if just one person at a ten-person meeting agrees with the other side's position or warns against a company action that is ultimately taken, minutes of that meeting reflecting the disagreement will blow a big hole in your case. If the opposing party is a former employee, that person may already have the minutes and they may become the basis for the lawsuit. If the other side does not have the minutes when the suit is filed, it will get the minutes in discovery, and the contents of the minutes are likely to protract the case.

For example, I recently defended a company whose contract was terminated. A lawsuit followed. My client's performance was, quite frankly, a bit shaky but probably not bad enough to warrant termination. I took the deposition of the contracts director for the other side and asked her pointblank if she thought the contract should have been terminated. She gave a good company response. "That was the company consensus." When I asked again whether she thought the contract should have been terminated, her lawyer raised all kinds of objections. The other lawyer was obviously worried about what her answer would be. So I pulled out the minutes of an internal meeting, which we had recently received in discovery, and which read roughly as follows: "Jack, David, and Charles thought that termination was justified due to their substandard performance. Jenny said that, as contracts director, she could unambiguously state that if we terminated the contract we would be in breach of contract. The realm of liability would be endless. A vote was taken and Jack, David, and Charles prevailed over Jenny."

While I have changed this story around a bit to protect the parties, the internal minutes actually did indicate that the contracts director gave "unambiguous" guidance that they were "breaching" the contract by terminating my client, and that "the realm of liability would be endless"! From there on out -- despite the performance shortcomings of my client -- we were no longer willing to settle. The litigation went on for a long time, and the other side ultimately gave up its cash demands. A poorly worded set of minutes greatly protracted litigation for the other side.

You must be very careful about the way you phrase internal meeting minutes. I am not criticizing dissent at meetings. Good companies encourage the expression of multiple viewpoints. That is the purpose of a meeting. But what is gained by writing every viewpoint down in real time? When a meeting involves determining a course of action that may have an adverse impact on your company or another party, ask yourself whether you really even need to keep minutes or detailed notes. If you decide to keep minutes, remember they are company minutes, not a record of every employee's personal viewpoint or (sometimes self-centered) agenda. The minutes should reflect the issues discussed and company consensus, not every angle that is taken in the meeting. If the minutes discussed above had read, quite truthfully, "After ten minutes of debate about the other side's performance between Jack, David, Charles, and Jenny, a vote was taken and the decision was made to terminate the contract," that lawsuit would have been settled a lot earlier. Keep in mind that an experienced trial lawyer can get a lot of mileage out of poorly written "stream-of-consciousness" minutes of your internal meetings.

NOTES AND DIARIES

The only thing worse than copious minutes-takers who do not understand litigation are copious note-takers who do not understand litigation. Note-takers are minutes-takers with editorial power. For example, the minutes of the meeting described above said, "Jack, David, and Charles thought the termination was justified." However, Jenny's notes might have said, "Jack, David, and Charles thought the contract should be terminated -- What idiots!"

Notes are the perfect medium for covering your backside and expressing your innermost negative feelings, but they can really hurt the company. Few employees ever consider that their notes will be paraded in front of a jury, but they are often key exhibits. Just remember that note-taking is not a form of therapy. Keep them objective.

But you have to do more. Remember that the other side will take your notes out of context. I once had a client who designed and installed highly sophisticated computer software for a big customer. The software passed all acceptance tests and worked well. A few months later, a number of glitches appeared in the program. Because the program had passed the acceptance tests, we suspected that the customer had tampered with the program. Nevertheless, the customer sued, alleging defective software design.

My client's lead software engineer had kept unbelievably detailed notes of the design effort -- 300 pages covering only two months. Not surprisingly, on several of those 300 pages, the engineer wrote about problems that his people were having with the program.

Noting problems is a good idea; that way they're not repeated. But you have to know how to note a problem. The engineer on this project tended to write about "screw-ups" and "breakdowns" that required some "engineering voodoo" to fix. In the context of 300 pages, these problems looked minor. But the other side edited the notes by compiling the twenty pages that contained the sort of language described above, and managed to paint a highly distorted picture of my client as incompetent. A lawsuit that was going nowhere got some additional life from some unartfully drafted notes.

When you are going to criticize your company in writing, first ask yourself whether the criticism is in a format that is going to help prevent this sort of problem in the future, whether it could be of use to any potentially adverse party, and whether it could be distorted to look a lot worse than it is. If the answer to the first question is no, then do not write it down. If the answer to all of the questions is yes, then the criticism should be objective in nature and surrounded with appropriate contextual information. Here is an example of the wrong way followed by an example of the right way.

Wrong way: "Day 24: Another screw-up with the software interface. Called Harry, who worked some sort of voodoo, and miracle of miracles, got the thing to work in some bizarre way that only he understands."

Right way: "Day 24: After six days without a problem, we had a software interface malfunction. I called Harry, who demonstrated his skills once again. It's good to have someone that knowledgeable on the team."

The wrong way involves subjective and pejorative terms and phrases such as "screw-up," "voodoo," "miracle," and "some bizarre way that only he understands." The right way uses more objective and positive terms (i.e., malfunction, knowledgeable) and provides the context that shows malfunctions were rare. The wrong way will advance the other side's case; the right way will stop it dead in its tracks.

CORPORATE POLICIES

There are big problems with the huge binders that contain corporate

policies. Getting people to read the policies is one problem, but not the

biggest one. The biggest problem with corporate policies is that they tend to be written as rules instead of standards.

In law school, professors teach the difference between a rule and a standard. Rules are absolute, like the Ten Commandments. Either you covet or you do not covet, and there is nothing in between. In contrast, standards are recommended models of conduct that can be adapted to different situations, and they can be met with a variety of conduct. Taking an oath to love, honor, and cherish is agreeing to a standard. There are many ways you can love and honor, and different people cherish differently.

Unfortunately, most companies have policies and procedures that read more like the Ten Commandments than wedding vows. And unless your CEO is Moses, your employees are going to break the corporate commandments all the time. I frequently see smart lawyers wave corporate policies in front of squirming witnesses and ask them why the policies were not followed. The answers range from "I never saw the policy" to "It wasn't really applicable to this situation." Juries are not particularly fond of either answer.

Take this example adapted from recent experience. Two parties had a dispute as to whether one was entitled to charge the other for first-class airfare to do a construction job in China. The same company that flew first class stayed in a four-star hotel and billed the customer for that too. The customer felt that the company was extravagant and refused to pay the difference between coach airfare and first class, as well as the difference between a three-star and a four-star hotel. The total differential was about $75,000.

The contractor responded that it needed to send its employees first class and lodge them in a nice hotel because the flight to China was eighteen hours, and the employees had to meet a grueling three-week, fourteen-hour-day construction schedule, which started the day after they arrived in China. The contractor's lawyer argued that its employees needed to be relaxed and well rested to do a good job. He further noted, quite accurately, that a four-star hotel in China is not nearly as nice as a four-star hotel in the United States.

The contract between the parties said the contractor could submit invoices for "reasonable travel and hotel accommodations," and the contractor's lawyer made a pretty good case that in light of the circumstances, first-class airfare and a four-star hotel were "reasonable."

That is, until the other side's lawyers took out the contractor's internal corporate travel policy. The policy had been written five years earlier, prior to the contractor's first international project, when the contractor had very little business outside the Illinois city in which it was headquartered. The drafters of the policy could not envision a situation involving an eighteen-hour flight for which first-class airfare might be justified. Consequently, the travel policy read, "Company officers shall travel coach or business class; all other employees shall travel coach." When the other side's lawyer got hold of that policy, it did not matter how reasonable first-class airfare was for the project at hand -- it was a violation of the contractor's policy, and that badly hurt the contractor's position.

This problem would have been prevented had the company updated its policy once it started getting big overseas projects. But it is unrealistic to expect that a company will consistently update its rules to reflect its rapidly changing business. The real problem was that the travel policy was a rule rather than a standard. It might as well have read, "Thou shalt not travel first class."

The appropriate language would have formulated a standard. Ideally, the company would have had a pure standard, such as: "Company employees shall make reasonable air travel and hotel arrangements in light of the purpose and demands of the trip." On the other hand, broad standards are susceptible to abuse by employees, such as the guy who says, "Well, we had to travel first class because of a seven A.M. tee time with a potential new customer." We all know the type of person who exploits every conceivable loophole in a policy.

The most effective policy states a general rule but contains what I call a "discretionary out," which turns the rule into a well-anchored standard. Here is an example: "As a general matter, corporate officers should travel coach or business class; all other employees should travel coach. The project manager may authorize exceptions where the requirements of the job so warrant." By stating a general rule and then authorizing a specific employee to make exceptions, the company will prevent internal abuses, but will not be held to rigid rules that will invariably prove inappropriate in some circumstances.

Many companies have been done in by their own policies, either because they were not followed or because they were not uniformly applied. A great number of these problems would have been avoided had the company written policies that represented a general standard of conduct with the explicit recognition of authorized exceptions for special circumstances. As you review your company policies, you should pay particular attention to those regarding company ethics, benefits, the evaluation or termination of employees, the reimbursement of expenses, and the procurement of goods or services from outside vendors. These are the policies that most often come into play in lawsuits, so they should be carefully written to provide guidance that is flexible enough to accommodate a variety of unforeseen circumstances.

LETTERS

While company employees perhaps tend to take too many notes and too many minutes, they often do not write enough letters. Never let a letter received from another company go unanswered. Remember that if a company is deciding whether to sue you and that company has an unanswered letter outlining its position on any matter of relevance, the company lawyer is likely to recommend filing suit. Why? Because a judge or jury will presume you agreed with everything contained in a letter that you did not answer. Many companies could have avoided many suits had someone simply answered a letter.

Just responding to a letter is, of course, not good enough. Business letters should always be objective and analytical. For every statement you make, support it with an explanation or, better yet, an example. Feel free to point out anything illogical in the other side's letter. However, leave nasty letters to lawyers. Juries expect them from lawyers, and lawyers are rarely witnesses. But no judge or jury is going to like a company witness who writes a nasty letter -- no matter how accurate it is. And when the other side is evaluating whether to sue you, it will consider which side looks "nicer" and which side looks "smarter" in the correspondence. The nicer you look and the more intelligent you look, the less likely you are to see a summons.

Another problem sometimes surfaces in letters. It is common practice for the author of a letter to look for allies in his or her own company and cite them as supporting his or her position, recollection, or understanding. That is a good idea, with one caveat. Never quote or lend the authority of someone else in your company unless you have run a draft of the letter by that person before sending it. It is not okay to cite someone else's viewpoint just because you heard him or her say it. You must let others in your compa

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Excerpted from Protect Yourself from Business Lawsuits by Thomas A Schweich Copyright © 2000 by Thomas A Schweich. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

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Table of Contents

CONTENTS

Introduction: The Art of Suitproofing

PART ONE

A System Out of Control

The Old Assumptions About the Law: Justice, Limits, Funds, and Lawyers as Friends

The Decline of Justice

Lawsuits Unlimited

Spiraling Legal Costs

Your Lawyer, Your Friend

The Lesson of Legal History

PART TWO

The Eight Big Mistakes

Mistake Number 1: Bad Writing

To Write or Not to Write

False Security

Internal vs. External Documents

Company Private Documents

Specific Types of Dangerous Documents

E-Mail

Meeting Minutes

Notes and Diaries

Corporate Policies

Letters

Marketing Information

The Cybertransaction

Document Retention

Keep It Legal

Cleaning Your Files

The Bright and Not-So-Bright Lines

Mistake Number 2: Bad Estimating

The Impossible Dream

Cost and Schedule Risks

Risk Assessments

Bad Learning Curves

The Management Challenge

Buying In

The Inestimable Value of Life

Mistake Number 3: Speculation

Probability Speculation

Capability Speculation

Liability Speculation

Mistake Number 4: Bad Research

The Enemy Within

The Enemy Without

Public vs. Private Information

The Parochial School

Mistake Number 5: Ignoring Problems

Identifying Problems

Employee Training

Internal Controls

Monitoring Third Parties

Acknowledging and Resolving Problems

Employee Problems

Critical Path Analysis

Conspiracy Theory

Mistake Number 6: Getting Personal

Corporation: Person or Machine?

The Hostile Environment

Prejudice

Business Ethics

The Market-Effect Resolution

The Fictional Demon

Changing Standards

Tortious Evidence

The Savior

Mistake Number 7: Side Deals

The "Four Corners" Doctrine

A Tear in the Paper

"Clear" Ambiguity

Where There's a Will There's a Waiver

Interference and Total Cost Claims

Implied Side Deals

Holes in the Paper

TBDs

Vague Standards

Conflicting Terms

Mistake Number 8: Misusing Your Power

Power over Individuals

Power over the Product

Power over Services

Power over the Transaction

Power over Information

Power over the Premises

Power over Other Companies

Power over Competition

Three New Duties: The Boatbuilders Example

Nipping the Problem in the Bud

Recapping the Eight Big Mistakes

PART THREE

The Four Shields

Shield Number 1: The Shield of Privilege

Misconceptions About the Attorney-Client Privilege

The Privilege Is Expensive

The Privilege Only Helps You When You Are Already in Trouble

If I Bring in Lawyers, They'll Take over the Place

The Privilege as an Eraser of Mistakes

Affirmative Privilege Programs

Compliance Programs

The 1-Percent Risk Audit

The Internal Corporate Investigation

Shield Number 2: The Shield of Definition

Defining Relationships

Labels, Flowers, and Boilerplate

Just Say It!

Defining Value

Shield Number 3: The Shield of Process

The Race to the Courthouse

The Neutral Forum-Selection Clause

Notice and Tolling Agreements

Fees, Please

The Alternative to Alternative Dispute Resolution

Arbitration

Mediation

New Alternatives

Senior Executive Presentations

Early Neutral Evaluation

Shield Number 4: The Shield of Relationships

The Stick: No New Business

Cross-Contract Clauses

Requests for Assurances Under the Uniform Commercial Code

Corporate Family Relationships

The Carrot: Business Without Lawsuits

Notes and Works Consulted

Glossary

Index

Editorial Reviews

Teresa McUsic The Washington Times An insider's description of the legal mania transpiring in the business world today....Excellent and practical advice.

Anne Fisher Fortune A fascinating book.

Richard J. Hunter The Mid-Atlantic Journal of Business Helpful and interesting....Schweich offers a very readable commentary on solving a major issue for corporations and business executives.

From the Publisher