If you’ve run your own business for any good amount of time, you’ve likely had to threaten someone to get payment, and then heard them mutter in return: “Go ahead, take me to court.”
As a business attorney, it used to baffle me that people could be so cavalier about litigation. But, the longer I practiced, the more I realized it was not about being cavalier.
Playing the Odds
And in the premier gambling state of this nation, it was a good bet to make that most threats for litigation died the moment they left someone’s mouth.
Not for lacking any value, mind you, but because most business owners eat, breathe, and live sound business practices. Thus, they are rarely in the mood to throw good money after the bad, using more of the businesses’ money on litigation to chase down someone who has stiffed them.
Because it is a fact that someone is going to break an agreement, and it is also fact that it will cost money to go after that person, the best way to prepare is to make the wound as small as possible.
The Three Best Ways to Accomplish That Are:
- Having a contract
- Making sure that your contract provides for attorney’s fees
- Mandating binding ADR to avoid litigation
Alternative Dispute Resolution
ADR stands for Alternative Dispute Resolution. It can be in the form of mediation or arbitration. Within that, the arbitration can be binding or non-binding. However, only binding arbitration spares you the cost of lengthy litigation.
So, while your contract may call for ADR, generally, if it does not say it will be binding arbitration, you may as well consider anything short of binding arbitration a legal pre-dance that’s only going to cost you more money.
However, in order for a binding arbitration clause to be effective in Nevada, it must be properly drafted by a business attorney. Then, you can assure it will be written with specificity, easily identifiable clauses in the contract, and separately signed in the agreement. Overall, you and the other party are not only signing the whole contract at the end, you are also both signing directly under the binding arbitration clause.
There is a downside to binding arbitration, in that if the decision does not go in your favor, your appeal rights are slim. This is especially concerning if you end up in front of the wrong arbitrator. Ultimately, this is a great discussion to have with your attorney to make sure you know what works best for your business. If your contract does not have an ADR clause, or if your contract has not been reviewed in the last eighteen months, give a business attorney a call.
Trusted Reno Business Attorney
Heather A. Ijames has seen the aftermath of unguided legal transactions when they end up in court. Now, Heather has devoted the entirety of her practice to spending that hour with a client to make sure the deal is right, before a client has to hire an attorney and spend tens of thousands of dollars on a trial. For exceptional services in business contracts and legal counsel, Ijames Law has the expertise. Contact us for more information or to schedule a consultation!
