How To Avoid Multi-Million Dollar Litigation, Part 4
Five Part Series by Sean Callagy of Callagy Law, your law firm in Paramus, Bergen County, New Jersey.
Please pass this entire series along and take action in sending it to your contacts and implementing its principles. Call me, Sean Callagy now at 201-261-1700.
Yesterday we discussed the three key agreement elements, which are:
1. Loser pays attorney’s fees, and ALL costs, including experts;
2. Choose a formula and one person to value the company in the event of a dispute;
3. Detail misconduct that will allow for one party to receive the interest of the other at a huge discount.
Let’s look at each for a moment.
First, a loser pays costs and attorney’s fees provision helps keep people honest.
This is because when people want to over reach, or be flat out dishonest thieves, the situation is very different in terms of leverage when they know that you have to take legal fees into consideration.
Even if you are right, your adversary knows you need to consider legal fees to stop them from harming you.
If your transactional attorneys included a fee shifting provision in your ownership agreement, then a very different leverage point is in play: your adversary risks paying not only his or her attorney’s fees and costs, but your attorney’s fees and costs also.
This becomes even more significant when you consider that the party attempting to stop the other party from wrong doing spends a lot more up front than the wrongdoer.
An application for emergent or injunctive relief by the party who is being wronged is costly. When the wrong doer has no fee shifting provision hanging over his or her head, he or she can do wrong and then see if you have the resolve, mentally and financially, to stop him or her.
That decision for you, and for the wrongdoer, is 180 degrees different when you are going to win and be awarded attorney’s fees, and potentially the company at a discount under point “3” above.
The same can be said for a mechanism to value the company. Again, a simplified and expedited method in this area prevents the wrongdoer owner from both presenting you with a long and costly road in valuing the company AND poses an enormous threat to the wrongdoer in having to bear your expert costs.
Again, this article is introductory BUT powerful.
Do your ownership agreements contain provisions like these?
Are they specific, detailed and designed to discourage, and, if unfortunately necessary, expedite litigation?
1. Vendor Agreements
2. Client Agreements
3. Employment Agreements
In our final part of our five part series tomorrow, we will look at the costly and difficult consequences of not having the other big three and how costly commercial litigation can truly be.
Commit to building a better sales and business development strategy for your business today! Join us at the Callagy Business Mastery Club on April 17th to find out how!
In your service,
If you do not have an ownership agreement, or know someone who may be without a fee shifting provision in an ownership agreement, please contact me, Sean Callagy now at 201-261-1700. You can also contact Sean Callagy or Callagy Law on LinkedIn, Facebook, Google+ or by Email.