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Protecting Your Company's Legal Health

Avoid Problems with Preventive Law
Smart business owners and managers reduce costs and avoid legal problems with preventive law practices.  Much like “preventive medicine” can help us avoid future problems in our personal health, preventive law helps businesses avoid disputes, injuries, and damage claims. Businesses can also strengthen their defenses when lawsuits are unavoidable.

This article will introduce you to the value of legal checkups, legal handbooks, contract strategies and litigation strategies. Your lawyer will help you to adopt the strategies that apply to your business. Preventive practices should be much less expensive than legal problems down the road.
Legal Checkups Detect Problems
Legal checkups – or legal audits – are something like an accountant's financial audit or medical examinations given by a physician.

During a legal checkup, your lawyer examines business records and practices and recommends steps that you can take to protect the legal health of your business. In a typical legal checkup, your lawyer will review documents such as your corporate charter, corporate minute book, purchase order forms, sales contracts, employment agreements, and loan agreements. Afterward you may get a written report summarizing findings and recommendations. An audit may uncover legal problems that should be corrected. For example, it may reveal that the company should revise sales contracts to limit warranties and liabilities or revise its employment applications to preserve the right to fire unsatisfactory employees.

Besides a written report, your lawyer can meet with you to explain the audit findings and recommendations and tell you how to avoid potential legal problems. At the meeting you can also learn which problems need immediate attention and which ones are less serious.
Legal Handbooks Ensure Compliance

Legal handbooks inform business owners and managers about the laws governing their day-to-day activities and help companies comply with state and federal regulations. They usually summarize the law and contain compliance checklists. Compliance failures can result in bad publicity, distracting lawsuits, and costly fines. Your lawyer can provide recommendations in creating a legal handbook for your business. 

A typical handbook is about 100 pages long and provides practical guidance on how to comply with the law. Some handbooks concentrate on one legal subject–such as legal restrictions on product pricing–while others cover several subjects. The most popular legal handbooks cover areas that can be hazardous to a company's legal health–compliance with antitrust, consumer protection, labor, and product liability law.

The handbooks are intended as reference guides to be kept handy on desktops and credenzas. Some companies distribute legal handbooks to all employees while other companies limit distribution.


Contracts Prevent Legal Problems
Contracts provide an important opportunity for you to prevent legal problems. Your lawyer can help you to negotiate contracts that will protect your rights and help you avoid disputes with your suppliers and customers.

For major equipment purchases or when buying a business, your lawyer can help you prepare a letter of intent that avoids unintended liabilities. Letters of intent are frequently used when negotiations are just beginning to document the basic terms of the business deal and to simplify further negotiations.

A carelessly drawn letter of intent can subject your company to damaging lawsuits. It is important to consult your lawyer before signing a letter of intent to protect your bargaining position in later negotiations.

After negotiations have been completed, it is important to carefully prepare and review contract documents to confirm that they reflect the business deal. It is also important that the contract documents cover contingencies that may not have been discussed during the negotiations. At a minimum the contract should contain "preventive'' provisions like remedies for default, procedures for handling disputes, provisions limiting your liability, and provisions indemnifying your company against injury and damage claims, Your lawyer can help you to review your important contracts and contract forms to assure that they protect your company against legal problems.
Other Legal Strategies  That Minimize Litigation Risks

Your lawyer can help you take steps to reduce the likelihood of lawsuits and win lawsuits that are unavoidable. To help you avoid lawsuits, your lawyer can recommend various procedures to be followed by managers and rank-and-file employees. Your lawyer may either undertake the company-wide legal checkup mentioned above or just concentrate on areas which present the greatest legal risks such as the hiring of employees and the sale of goods and services.

Other procedures protect your company when disputes are unavoidable. For example, your lawyer can help your company adopt proper procedures to take upon receiving legal documents. Your lawyer can also provide you with checklists of "do's" and "don'ts" for handling disputes. Checklists can be prepared for various situations–when a business deal goes sour, when an employee is injured, when a customer complains about a product or service, or when a government investigator calls the company.
Preventive legal practices pay for themselves by helping you to avoid legal problems, reduce legal risks, and recognize strategic legal advantages.

Your lawyer can help keep you out of court and defend you against unavoidable lawsuits. To protect your legal health, remember to consult your lawyer when contemplating business ventures, entering into agreements with suppliers and customers, and when developing policies for personnel, sales and purchasing matters.