PUGET SOUND BUSINESS JOURNAL DECEMBER 5-11, 2008
LAW &
December 5-11, 2008
Don’t letDon’t
the economy
yourforce
litigation
let the force
economy
yourstrategy
litigation stra
Y
Y
Few
real business ner
feels.
Work to
resolve
disagreement
California
distributor
ourour
key key
California
distributor
a disagreement,
their
actions,
and
beingthe
aggressive
can
LEGAL
isn’tisn’t
holding
up its
of the
you need
find
be aand
cover
for their
own mistakes.
disputes
aretoresolved
first
decide
later whether
any of your
holding
up end
its end
of the
STRATEGIES when
deal.
They
are are
20 days
overdue
that out
early
– If youhave
are in
suit,
let your goals
one as
party
reacts employees
letayou
down.
deal.
They
20 days
overon their
account,
and they
have
as possible
dictate
your strategy.
Decide
on
harshly
out and
of the
– Be cautious
of a thirst
forearly
vindicadue on
their account,
and
they
failedfailed
to get
a new
marketing
plan
thenTake
be realistic
whatEmployees
your goalswho
are want
and arrive
at a stratbox.
time to fig- tion.
to respond
aghave
to you
get you
a new
marketing
plan
for 2009.
2009.
regarding
how
your gressively
egy to reach
those
example,
ure
out what’s
going
to the
othergoals.
side For
frequently
are
for
Your company’s profits are down and
deal partner feels.
if your customer is in payment default
on — talk to them, or seeking personal vindication for their acYour company’s profits are down and
your CEO is grumpy and wants to get
Work to resolve the and won’t respond to you, proceed with
better
yet, meet first
face tions,
and being
aggressivethat
canyour
be a No.
cover
your
CEO
is the
grumpy
and wants to get tough
tough
with
distributor.
disagreement
litigation
but recognize
1
with
the
distributor.
to
face
and
try
to
lisfor
their
own
mistakes.
Randy
You agree.
and decide later
goal should be performing due diligence
You
ten
to yourany
dealofpartIf you
in a there
suit, let
yourprospect
goals
Beighle
Youagree.
fire off a default letter the next
whether
your to– find
out are
whether
is any
You
fire
off
a
default
letter
the
next
day,
ner.
If
they
won’t
be
dictate
your
strategy.
Decide
early
on
whatin
day, informing your distributor that
employees have let
for payment. Don’t waste good money
informing
your
distributor
that
their
agreehonest
with
you
or
your
goals
are
and
arrive
at
a
strategy
to
their agreement will be terminated in
you down.
a futile chase for a worthless judgment.
10 days
they payintheir
account
in seem
– Be
cautious
of a thirst
vindicaAlternatively,
you For
can use
the litigation
ment
willunless
be terminated
10 days
unless
to be
manipulating
the for
situation,
call reach
those goals.
example,
if your
full, bring
their
sales up
a
tion.on
Employees
wantin
topersonal
respondat- customer
to educate
key
decision
makers
the
they
pay their
account
in and
full,provide
bring their
them
it without who
engaging
is in
payment
default
andonwon’t
2009up
business
plan.a 2009 business plan. tacks.
aggressively
to the
other
side
other side
thatproceed
they have
sales
and provide
Make a real
effort
to see
thefrequently
situation respond
to you,
withproblems
litigationwith
but
Whathappens
happensnext?
next?
tough
letter
are seeking
personal
for
their position;
gather
supporting
What
A Atough
letter
from from
their side.
If being vindication
diplomatic doesn’t
recognize
that your
No.facts
1 goal
should be
fromlawyer
their lawyer
threatening
their
threatening
a lawsuit.a lawsuit. work, there will be plenty of time to escalate performing due diligence to find out whethThat’s when I receive a frantic phone
That’s when I receive a frantic phone going forward. Recognize, however, that er there is any prospect for payment. Don’t
call, asking me to sue the distributor in
call,
askingSound
me to sue
distributor
in the it’s much easier to escalate than to de- waste good money in a futile chase for a
the Puget
areathe
before
your comPuget
Sound
area
before
your
company
is escalate a situation, so don’t ramp up the worthless judgment. Alternatively, you can
pany is sued in California.
sued
in
California.
rhetoric until you have given diplomacy a use the litigation to educate key decision
I have seen variations of that sceI
have
seen
variations
of
that
scenario
good opportunity.
makers on the other side that they have
nario hundreds of times during the
hundreds
of
times
during
the
past
25
years,
–
Recognize
financial
trouble
early,
and
problems with their position; gather facts
past 25 years, from both sides of the
dispute,
I tend
see many
from
bothbut
sides
of thetodispute,
but Imore
tend toof deal with it. Companies rarely go into pay- supporting your side without engaging
them
at the
beginning
down cycle
see
many
more
of them atof
thea beginning
of ment default when they have enough money in scorched-earth tactics and then pursue
the economy.
Aseconomy.
businessAsslows,
aindown
cycle in the
business to pay. When your customer stops paying mediation.
pressure
builds
inside
businesses
to to you promptly, it’s usually because they are
slows,
pressure
builds
inside
businesses
Navigating a business down cycle takes
protecttheir
theirown
ownbottom
bottom
line;
employ- in financial trouble and not because they skill, but avoid making it worse by poorly
protect
line;
employees
ees feel vulnerable and act defensively
feel vulnerable and act defensively to pro- are evil. That said, you need to get to your managing your business disputes. Don’t let
to protect their own jobs. This leads
tect
their own jobs.
This leads
toother
increased customer quickly and not let the payment the down cycle suck you into rashly escato increased
pressure
on the
pressure
on
the
other
side
of
a
deal
side of a deal and a sharp increaseand
in a default fester. Figure out if you can pro- lating a dispute — try to keep your head
sharp
increase
in
lawsuits.
tect yourself by taking collateral for their while others behave emotionally.
lawsuits.
IsIs an
an increase
increase ininlawsuits
lawsuits
good
for
debt or whether there are other alternatives
good for
business?
For
me,
the
answer
is
yes
since
available.
business? For me, the answer is yes
sincemy
that’s
my profession,
butbusinesses,
for most
that’s
profession,
but for most
– Don’t play “blame the messenger” with
businesses,
is an expensive,
litigation
is litigation
an expensive,
backward- your employees. Demand accountability
backward-looking
process
can beon
a from your employees, but make sure you RANDY BEIGHLE is a shareholder at Lane
looking
process that
can bethat
a drain
drain on resources.
resources.
listen well and don’t blame the messenger. Powell PC and chairman of the firm’s Complex Litigation Practice Group. He focuses his practice on
The question
question is,
avoid
The
is, how
howcan
canyou
you
avoid If your company shares some or much of business and commercial litigation, and has handled
letting the down cycle force your litigaletting the down cycle force your litigation the blame in a disagreement, you need to matters ranging from business acquisition disputes to
tion strategy? I have five basic suggesstrategy?
find that out as early as possible and then franchising and dealership contracts. Reach him at
tions: I have five basic suggestions:
–– Start
out
as
a
diplomat,
not
a
warrior.
be realistic regarding how your deal part- 206.223.7096 or at beighler@lanepowell.com.
Start out as a diplomat, not a warrior. Few real business disputes are
resolved when one party reacts harshly
out of the box. Take time
to figure
Reprinted
for webout
use with permission from the Puget Sound Business Journal. ©2008, all rights reserved.
what’s going on — talk to them, or
Reprinted by Scoop ReprintSource 1-800-767-3263.
better yet, meet face to face and try to
listen to your deal partner. If they won’t
be honest with you or seem to be manipulating the situation, call them on it
without engaging in personal attacks.
your
eart
N
take
by p
pute
into
to ke
emo
RAN
ell P
gatio
busin
matte
to fra
206.2