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At TBH&E, we celebrate our one-year anniversary today by thanking our clients, friends, and families for their trust and support! We have been thrilled by the positive response to the firm, and we look forward to continued service and success.

Effective January 1, 2015, complex business, commercial and construction cases with damages in excess of $200,000 are eligible for placement in the State’s new Complex Business Litigation Program.  The Program will encompass both jury and non-jury matters.  Upon initial filing, counsel for Plaintiff can designate the matter as a complex business litigation matter and request inclusion in the Program.  It is hoped that the litigation of such designated matters will be streamlined and more effectively managed resulting in lower litigation costs to the parties and expedited case resolution.

Under the Program, eligible Complex Commercial matters include: claims by, against, and among parties that arise out of business or commercial transactions and involve parties’ exposure to potentially significant damage awards; or where the business or commercial claim involves complex factual or legal issues; a large number of separately represented parties; potential numerous pre-trial motions raising difficult or novel legal issues; case management of a large number of lay and expert witnesses or a substantial amount of documentary evidence (including electronically stored information); substantial time required to complete the trial; significant interpretation of a business or commercial statute; or involves other contentions of a complex business – commercial nature.

Eligible Complex Construction matters include: claims by, against, and among owners, contractors, subcontractors, fabricators and installers, architects, engineers, design and construction consultants, and other similar parties associated with a construction project that involves parties’ exposure to potentially significant damage awards because of claimed design and construction defects, or facility delivery delay claims or where the construction claim involves complex factual or legal issues; a large number of separately represented parties; potential numerous pre-trial motions raising difficult or novel legal issues; case management of a large number of lay and expert witnesses or a substantial amount of documentary evidence (including electronically stored information); substantial time required to complete the trial. Complex construction does not include construction and professional payment and billing claims, change order claims, wrongful termination, quantum merit, construction lien or mechanics lien claims, unless associated with a complex construction claim as herein described.

Parties may file a motion with the Complex Business Litigation Program judge for inclusion in the Program where the amount in controversy is less than $200,000. Parties may also move for removal from the Program on the grounds that the action does not meet the eligibility criteria.  Finally, while cases in the Program are not part of the court’s mandatory civil mediation and arbitration programs, the Complex Business Litigation Program Judge in each vicinage, as part of case management, will continue to encourage the parties to engage in mediation.

 

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The attorneys at Timmerman, Beaulieu, Hinkle & Esworthy, LLC are well versed in handling complex business, commercial and construction litigation in New Jersey and throughout the Mid-Atlantic region.  Mike Hinkle is a founding partner of Timmerman, Beaulieu, Hinkle & Esworthy, LLC and manages the firm’s New Jersey practice.  Mike’s practice focuses on complex insurance defense and business litigation in the federal and state courts of Maryland, New Jersey, and Pennsylvania.  He can be contacted at (410) 649-4440 in Maryland, (717) 698-1428 in Pennsylvania or via email at mjh@tbhelaw.com.

TBH&E Partner Jason P. Beaulieu has been selected by his peers as a Super Lawyer® for the State of Maryland in 2015, a distinction awarded to less than 5% of all attorneys in the State.  Super Lawyers® selects attorneys using a rigorous, multiphase process in which peer nominations and evaluations are combined with independent research of a candidate’s professional achievement and ethics.  Selections are made on an annual, state-by-state basis.  This marks Jason’s third consecutive selection as a Maryland Super Lawyer®.

 

Jason is a founding partner of Timmerman Beaulieu Hinkle & Esworthy, LLC.  His practice focuses on civil and business litigation. He can be contacted by phone at (410) 649-4440 or by email at jpb@tbhelaw.com.

In Faust v. J.P. MacGrady’s, a Northampton County Court of Common Pleas judge overruled Defendant Tavern’s preliminary objections to a claim for punitive damages in the Plaintiff’s Complaint arising from a fatal motor vehicle accident. 58 Northampton 331 (Nov. 19, 2013).  In doing so, the Court found that the Complaint alleged facts sufficient to support a finding that the Defendant engaged in outrageous conduct by disregarding a known or obvious risk of probable harm when its employees continued to serve a visibly intoxicated patron despite having knowledge that said patron would drive from the premises.  The alleged intoxicated patron was subsequently involved in a fatal motor vehicle accident.*

Section 4-497 of the Pennsylvania Liquor Code (the “Dram Shop Act”) shields liquor licensees, such as bars and taverns, from liability to a third party unless the person causing the injury was served alcohol while exhibiting visible signs of intoxication.  The majority of courts in Pennsylvania have held that the Dram Shop Act is the exclusive remedy to third party injuries resulting from a violation of the Act.  Accordingly, courts will not grant relief for claims involving the service of alcohol based on common law negligence such as failure to properly train servers or other staff, violation of policies or procedures and failure to warn/prevent an intoxicated patron from driving, to name a few.  However, all establishments serving alcohol should be aware that conduct such as that alleged in Faust could expose their establishment to punitive damages, which are generally not covered under a policy of insurance.

The most effective way for an establishment serving liquor to prevent unwanted violations of the Dram Shop Act is to ensure that all servers regularly receive responsible alcohol service training and are educated on recognizing the signs of visible intoxication.  In addition, establishments should have strict policies and procedures in place prohibiting the service of alcohol to visibly intoxicated patrons.  Unfortunately, not even the most stringent of policies and procedures can prevent the occurrence of all claims brought by injured third parties. Therefore, it is paramount that sufficient liquor liability insurance is obtained with the proper coverages and limits.

* Source: Pennsylvania Bar News, Court Summaries

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The attorneys at Timmerman, Beaulieu, Hinkle & Esworthy, LLC are well versed in defending restaurants, bars, taverns, nightclubs and other entertainment venues in Dram Shop and liquor liability litigation throughout the Mid-Atlantic region.  Mike Hinkle is a founding partner of Timmerman, Beaulieu, Hinkle & Esworthy, LLC.  Mike’s practice focuses on complex insurance defense and business litigation in the federal and state courts of Maryland, New Jersey and Pennsylvania.  He can be contacted at (410) 649-4440 in Maryland, (717) 698-1428 in Pennsylvania or via email at mjh@tbhelaw.com.

You get the case. Extremely defensible on both liability and damages. You take notes, call witnesses, plot strategy.

You draft the responsive pleading and written discovery requests. You summarize your initial thoughts for the client. You do some research on the plaintiff. Bingo. A prior conviction within 15 years that is likely to be permitted at trial.

You review medical records and other important documents. Lots of them. Bingo again. Prior problems with the affected area and no credible exacerbation from the incident. You hire an expert.

Your paralegal’s medical chronology helps with the big picture, too. Organization is key. Depositions are noted; outlines are prepared.
You speak again with your client. He’s pissed he’s being sued in the first place. You agree that the claim is weak but inform him that it doesn’t take much to file a lawsuit. He wants to countersue. You explain why he can’t. He’s even more pissed. You tell him you understand.

You take depositions. Bingo again. Sworn deposition testimony you know to be false. More impeachment ammo. The jury will hate him.

You defend depositions. Whoops. Some inconsistent testimony. Damage control is developed. Another update to the client. Mediation is scheduled; case value is discussed.

You consider a dispositive motion and do the research. Should be a winner. The plaintiff lacks a fundamental witness. You consider the jurisdiction, though, and decide that, in this instance, a motion for summary judgment will be nothing more than a carefully written letter to your opponent advising him of his case’s weaknesses.

Plaintiff’s medical expert’s fact deposition. Bingo. He clearly didn’t review all records and has a damaging gap in his CV. He’s pretty smooth, though, and from a well-known organization. Attacking him on cross will be crucial.

Mediation. Plaintiff is greedy and has no idea about the extent of your impeachment evidence. It’s not a perfect case, though, and sympathy could be a factor. The case doesn’t resolve. One more chance at the settlement conference, but a trial seems likely.

Settlement conference. You’re there 10 minutes. No deal. A trial date is set. You feel a tingle of adrenaline.

Trial preparation. You pour over literally thousands of documents. You prep witnesses and prepare exhibits. You work weekends and see your family sparingly. When you do see them it’s like breaths of fresh air. Kisses on the heads of sleeping children. Back to work.

Trial day; the first of three. You can’t sleep much and breakfast is light. You lug trial bags and exhibits to the courtroom. You meet with your client then with the judge in chambers to hammer out preliminary matters.

Rulings are put on the record along with the necessary proffers. Time to pick a jury.

Voir dire – questions to potential jurors. Painfully slow but absolutely critical. You play poker; you look for tells. Yep, she’ll feel sorry for the plaintiff and award big cash. Strike. He’ll see right through the plaintiff and will be tight on damages. Damn, stricken by plaintiff’s counsel. Finally, a jury.

They’re sworn and seated.

Opening statements. Plaintiff’s sketchy past is a godsend. Your exhibit blow ups seem worth it, too. Juror 4 is with you from the get go. Juror 6, not so much.

Plaintiff’s case. Direct examination followed by the payoff for a trial attorney: cross–examination with impeachment materials at your fingertips. It’s where highlighters and sticky notes do their thing. After four witnesses, Plaintiff rests.

Motion for judgment at the mid-point. Denied “for now.” What’s that mean? The flaw in plaintiff’s case at the close of discovery wasn’t cured by the close of his case. That should mean we go home early. Not so fast. Looks like the jury will get it.

Defendant’s case. Your subpoenaed witnesses show. Most deliver. Some are intimidated by the plaintiff. Day 2 concludes. Tomorrow’s the thing. Your client and expert will testify. Another late night of preparation.

It’s 3:04 a.m., and there it is. An 18-month case, thousands of documents, and a dozen witnesses, whittled down to a 3-page hand-written closing argument. Crystallized. You get a sense of calm. Win or lose, you’ve worked as hard as you can.

Final day of trial. Your client meets you early as requested. Panic sets in when you see him. You respectfully ask him to hide the Pittsburgh Steelers knit cap he wore into the courtroom, lest the jurors see it. He thinks you’re joking. You’re not.

You call your final witnesses then rest. Motion renewed. The judge comes close to granting it but denies it again. Frustration.

The jury is instructed. Closing arguments are given. You barely look at your 3-page outline. You’ve lived the case, that’s why. The jury leaves to deliberate.

They’re out 15, 30, then 45 minutes. Your client is worried. So are you. You think about Tom Petty and how he’s right: the waiting is the hardest part.

The law clerk enters the courtroom. They have a verdict. The jurors walk in and sit down. Stone-faced, no tells.
Question 1 on the verdict sheet: “Was the defendant negligent?” The foreman stands. “No,” he responds. Your client shakes your hand. You smile and exhale.

Phone calls to the office. Phone calls home. You pack up your stuff and head to the garage. It’s mostly empty. You start the car and exhale again. Decompression.

Until tomorrow when you get another case, take notes, plot strategy.

About the Author

Jason Beaulieu is a founding partner of Timmerman Beaulieu Hinkle & Esworthy, LLC. Jason’s practice focuses on complex civil litigation in Maryland and the District of Columbia, with a focus on insurance defense, school liability, construction litigation, and the retail/hospitality industry. He also advises individuals and businesses of all sizes on general business and risk management issues. He can be contacted by phone at (410) 649-4440 or by e-mail at jpb@tbhelaw.com.

If You are Swimming with Sharks…
– How To Avoid Lawsuits
– Best Practices to Save Your Case and Your Assets

DATE: Friday, May 30th

TIME:

8:00 am to 8:30 am Networking & Breakfast
8:30 am to 10:00 am Presentation

WHERE:

PSA Financial
11311 McCormick Road
Hunt Valley, Md

SPEAKER:

James M. Timmerman, Partner
Timmerman, Beaulieu, Hinkle & Esworthy, LLC.

SUMMARY :

This is an opportunity to get practical and hands on advice from a well known and experienced business and trial lawyer. Jim has promised us that this discussion will be down to earth, lively, and most importantly–save your business from possible financial ruin.

Guests may attend one HVBF Roundtable before joining the HVBF.

For more information and online registration to attend for free click here: If You are Swimming with Sharks…

TBH&E partners Jim Timmerman and Jason Beaulieu recently offered tips to business owners about preventing lawsuits, reducing liability, and protecting assets on CBS Radio’s “Small Business Secret Weapon Hour.” For anyone who missed the broadcast and wants to hear this valuable information you can listen to the segment below.

The Basics of Risk Allocation

Understanding Contractual Indemnity and Insurance Provisions

Contractual Indemnity

Shifting risk of loss from one party to another in a contract is recognized in many industries as a vital and necessary risk management tool.  Usually, the transfer of risk is carried out via an indemnity or hold harmless provision in the contract. For example, the Indemnitor (Party B) agrees to “indemnify or hold harmless” the Indemnitee (Party A) against certain liabilities arising out of the activity that is the subject of the contract.

Such provisions are typical in construction and service contracts in which Party A requires Party B to indemnify it for liability to a third party arising from Party B’s scope of work.  For example, a general contractor (Party B) might agree to indemnify the owner of a project (Party A) for liability to an injured third party arising from the owner’s or general contractor’s negligence.  Should the injured third party file suit against the owner, the owner can point to the indemnity provision in the contract and assert that the general contractor must indemnify it.  Typically, if the general contractor’s general liability insurance carrier determines that there is coverage, it will pay to defend the suit against the owner and any awarded damages, subject to the general contractor’s insurance policy limits

There are generally three types of Indemnity provisions:

1. Broad Form – provides that the Indemnitor (Party B) must indemnify the Indemnitee (Party A) for all liability and risk irrespective of which party was actually at fault.
2. Intermediate Form – provides that the Indemnitor (Party B) must indemnify the Indemnitee (Party A) for all liability and risk except where the injury or damage is caused by the Indemnitee’s (Party A) sole negligence.
3. Limited Form – provides that the Indemnitor (Party B) must indemnify the Indemnitee (Party A) for all liability and risk only to the extent of the Indemnitor’s (Party B) fault.

Limitations of Indemnity Provisions in Construction Contracts

It is important to understand that many states have imposed restrictions on the types of risk that can be transferred to another party in construction contracts.  For example, many states prohibit the transfer of one party’s own negligence to another party as a matter of public policy while others prohibit only the transfer of one party party’s sole negligence.

Anti-Indemnity Statutes in TBH&E’s Practice Jurisdictions

Maryland	By statute, prohibits contractual indemnification of one party’s sole negligence.  Md. Code. Ann., Cits & Jud. Proc. 5-401.
D.C.	No statute.
Pennsylvania	No statute prohibiting contractual indemnification if the intent of the parties to do so is clearly and unequivocally stated in the contract.  Otherwise, PA Courts have deemed broad form indemnity provisions unenforceable.  See Perry v. Payne, 217 Pa. 252, 66 A. 553 (Pa. 1907); Ruzzi v. Butler Petroleum Co., 527 Pa. 1, 588 A.2d 1 (Pa. 1991).
New Jersey	By statute, prohibits contractual indemnification of one party’s sole negligence. N.J. Stat. Ann. § 2A:40A-1.
Virginia	By statute, prohibits contractual indemnification of one party’s sole negligence. Va. Code Ann. § 11-4.1.

When a contractual indemnity provision is deemed unenforceable by statute or by the Courts, the legal obligation of Party B to indemnify Party A is not triggered.  Thus, Party A will be responsible for its defense costs and any award against it despite the fact that the contract may have stated otherwise.  To protect against this possibility, Indemnitees (Party A) will frequently require that it be named as an additional insured under the Indemnitor’s (Party B) insurance policy.

Additional Insured

Generally speaking, an Indemnitee (Party A), pursuant to a contractual indemnity provision, is not considered an insured under the Indemnitor’s (Party B) insurance policy.  As such, an Indemnitee (Party A) does not enjoy the same rights and protections that the Indemnitor (Party B) does under Party B’s policy.  However, if Party A is named as an additional insured under Party B’s policy, it would have a direct right to defense coverage and/or indemnification for insured claims under Party B’s policy, independent of the enforceability of the indemnity provision in the contract.  It, therefore, is preferable for Party A to not only incorporate an indemnity provision into the contract but to also require in the contract that Party B name it as an additional insured under Party B’s policy.

 Strategies for Allocating Risk as the Indemnitee (Party A)

1. Do not ignore your state’s Anti-Indemnity laws, if applicable, and make sure that your contract’s indemnity provision is clear and unequivocal.
2. Remember that any ambiguity of contractual terms will be construed by courts against the drafter of the contract.  Accordingly, if you are using your contract, make sure that the terms incorporated therein are clear and unambiguous. 
3. If your state prohibits contractual indemnification of your sole negligence, require that the other party name your company as an additional insured under its general liability insurance policy.
4. Require that the other party maintain adequate insurance coverage.
5. Verify compliance with your insurance requirements by requiring the other party to provide a Certificate of Insurance, confirming coverage limits and your status as an additional insured.
6. Be advised that a Certificate of Insurance provides only limited information regarding the other party’s insurance policy.  It does not bind coverage.  Therefore, you should confirm to the best of your ability that the other party’s policy of insurance does, in fact, name your company as an additional insured. Moreover, follow up with the insurance carrier monthly to be sure the policy is still in effect. Occasionally, dubious subcontractors will provide the COI during the bidding process then, after getting the job, will not pay the premium in an effort to increase profit.
7. Require that the other party immediately notify you, in writing, of any changes in insurance including the existence of other claims made against the applicable policy that would reduce the amount of coverage available to you.

Strategies for Accepting Risk as the Indemnitor (Party B)

1. Read the entire contract.  Before signing any agreement, it is paramount that you understand what you are signing.
2. Understand that if you execute a contract that contains a broad form indemnity provision, you are agreeing to indemnify the other party even if it is 100% at fault for causing the injury or damage.
3. Negotiate indemnity and insurance provisions.  Often times, you will be handed a “standard” contract that has not been modified to reflect the specific nature of your company’s scope of work.  Rather than simply accepting the contract as is, you should take an active role in negotiating reasonable terms.
4. If you are required by the contract to name the other party as an additional insured under your policy, make sure that you do so.  Upon executing the contract, contact your insurance agent/broker and confirm that the other party has, in fact, been named as an additional insured under your policy.  Failure to do so may constitute a breach of contract and leave your company personally liable for the other party’s defense and/or indemnification.
5. Be advised that a Certificate of Insurance provides only limited information regarding your insurance policy.  It does not bind coverage.  Therefore, you should obtain a copy of your insurance policy and confirm that the other party is, in fact, a named additional insured under the policy.
6. If your company routinely enters into contracts requiring it to name others as additional insureds under your policy, consider adding a Blanket Additional Insured Endorsement to your policy.  A typical blanket endorsement will automatically provide additional insured status to any party that your company agrees to name as such in an executed contract or agreement.

 

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 About the Author

Mike Hinkle is a founding partner of Timmerman, Beaulieu, Hinkle & Esworthy, LLC.  Mike’s practice focuses on complex business and insurance defense litigation in the federal and state courts of Maryland, New Jersey and Pennsylvania.  He can be contacted at (410) 649-4440 in Maryland, (717) 698-1428 in Pennsylvania or via email at mjh@tbhelaw.com.

 

© 2014 TBH&E, LLC  All Rights Reserved

 

One of the toughest lessons an attorney learns is that the practice of law has very little to do with the practice of justice. In civil litigation this is especially true when you see cases with little to no merit settle for a dollar figure that is more about the economic realities of taking a case through trial than a defendant’s liability or a plaintiff’s genuine damages.

Inevitably, the question arises, “how much will it cost to try the case?” If the answer is, say, $30,000, and the plaintiff will take $20,000, some companies view that as a $10,000 win. I’ve even seen people try to squeeze pre-discovery settlement money out of non-liable defendants by calling it a “peace dividend.” Now that’s chutzpah.

Perhaps the most frustrating reality in civil litigation, however, is the reluctance of some judges to grant motions for summary judgment. For those unfamiliar with the term, summary judgment is when the undisputed facts allow a lawsuit, or a portion thereof, to be decided by the judge shy of trial. The usual context is on a motion by the defendant which basically says, “even if you believe the facts as alleged by the plaintiff, he can’t win when the law is applied, so dismiss it now and save us all the hassle.”

The value of summary judgment is obvious: cases that need not go further are disposed of expeditiously, freeing up dockets and saving litigants (and taxpayers) time, effort, and money. A side benefit occurs when the defeated plaintiff’s attorney thinks twice about clogging the court system again with a similarly flawed claim.

But, how reluctant are some judges to grant summary judgment?

This is a true story. I once had a case where we filed a motion for summary judgment because the Plaintiff’s deposition testimony mirrored the Defendant’s as to how the incident occurred. This means there was no dispute of fact for a jury to consider, and the court’s job was to make a decision. Our motion said as much and highlighted the applicable statute. The Plaintiff’s opposition agreed that there was no dispute of fact and that the case hinged on interpretation of a statute. Result? Denied, without explanation.

Next, we did what litigators rarely do: we filed a Motion for Reconsideration, which essentially asks a judge to admit he was wrong. As you might expect, most judges don’t take too kindly to that suggestion. Result? Denied, without explanation.

Eventually, the case went to trial before a different judge where the same undisputed facts were established during Plaintiff’s case. After Plaintiff rested, we made a motion for judgment on the same exact basis cited in our prior pleadings. Result? Defense judgment. Who knows the amount of lost time and resources, but it was in the thousands of dollars for the parties and the taxpayers.

So what’s the answer? Here are three quick suggestions:

One Judge

Cases should be assigned to one judge for the duration of the litigation. Logically, that judge will become more familiar with the facts and issues of the case and, when warranted, more inclined to grant summary judgment. It works well in the federal courts and in the few state jurisdictions that try it. It also promotes the interests of judicial economy and efficiency.

More clerks

Judges need help to wade through all the motions that get filed, summary judgment and otherwise. No one is more important in that role than law clerks. Judges with complex civil litigation tracks, for example, should have at least two law clerks to help deal with the filings. If even a small number of cases get kicked, the resulting savings in judicial resources would justify the additional salaries.

Guts

It’s not easy granting summary judgments. It takes guts. It takes telling a plaintiff that, despite how sad or compelling the undisputed facts, the law does not permit him to recover damages. It takes telling a plaintiff that sometimes her “day in court” is the motions hearing at which the judge is required to rule that the case cannot proceed. It’s also realizing that a defendant’s right to have the case end at the appropriate stage is as important as a plaintiff’s right to take her case through trial. Ultimately, it also takes not being afraid that an appellate court may disagree.

Over the years, I’ve been fortunate enough to have had several serious cases dismissed via summary judgment by judges who had the time and inclination to do so. And, by and large, Maryland is blessed with a solid judiciary.

Current economic realities, however, mean all governmental entities, including the courts, need to do more with less. In other words, multiple law clerks aren’t coming anytime soon and one-judge tracking systems may be slow to develop. Despite these hurdles, the underlying goal of our legal system remains the same: Justice. In that regard, summary judgment is an essential tool to enhance the efficiency and fairness of the process by which we pursue that goal.

About the Author

Jason Beaulieu is a founding partner of Timmerman Beaulieu Hinkle & Esworthy, LLC.  Jason’s practice focuses on complex civil litigation in Maryland and the District of Columbia, with a focus on insurance defense, school liability, construction litigation, and the retail/hospitality industry.  He also advises individuals and businesses of all sizes on general business and risk management issues. He can be contacted by phone at (410) 649-4440 or by e-mail at jpb@tbhelaw.com.

 

Unfortunately, we live in a litigious society. What that says about society is for someone else to decide.  But the fact of the matter is that any business can be sued at any time by an employee, customer, vendor, or just about anyone that it comes into contact with over the course of the day.  The number of fact patterns that lead to lawsuits is endless, and the sad reality is there is nothing you can do to guarantee that you will never be sued.  To add insult to injury, defending a lawsuit can be expensive, time consuming, and emotionally draining.

Are you ready for some good news?  Many lawsuits can be prevented altogether, and those that can’t be prevented may be neutered by employing some simple best practices.

Do a good job and be professional.  You are a business owner so you have specialized skills and experience.  When you make a commitment to a client or customer, honor that commitment and make customer satisfaction a priority.  The reality is that most people recognize that mistakes happen.  When things go wrong for whatever reason, people are less likely to get adversarial if they have enjoyed working with, or doing business with, you.

Communicate.  It should come as no surprise that many lawsuits arise from a simple misunderstanding.  One of the best preventive measures to avoid litigation can be a non-accusatory discussion in which any disagreement or misunderstanding is explored.  A simple telephone call or honest discussion can save much time and money.  Note – such discussions must end immediately if a lawsuit is imminent or has been filed. At that point, discussions should be conducted by counsel.

Document everything.  The best way to avoid a misunderstanding in the first instance is to document all applicable policies and terms.  A well-drafted contract, employment manual, or other writing that records critical terms of an agreement or event can prevent a misunderstanding from devolving into a lawsuit.  The cost of engaging an attorney to review documents such as contracts and purchase orders is nominal when compared to the expense associated with defending a single claim.  Have an attorney write you a solid contract that properly limits your liability and exposure.  Also, review and understand all contract terms before you sign.  If you don’t understand something, ask for clarification.  Similarly, when possible, discuss the decision and process of terminating an employee before doing so.  You will be better prepared and can prevent pitfalls that you may not have considered.

Understand the applicable laws.  One sure fire way to avoid a lawsuit is to be compliant with the law.  This includes knowing what to file, when to file and where to file.  Spend the time to understand the local, state, and federal laws that apply to your business.  This is not as daunting a task as it might sound.  There are numerous laws and regulations that apply to any business.  However, today’s technology allows for efficient and convenient research.  Moreover, there are many business resources available to you through your state and local governments.  Your business should also have a regular legal “check up.”  The law is constantly changing.  The cost of a meeting or two with a trusted attorney or business advisor will pale in comparison to the costs of defending even a single lawsuit.  Keep your documents and policies up to date.

Maintain your property.  Injuries equal lawsuits.  So …  prevent accidents from happening in the first place by maintaining your property and keeping a safe and secure workplace.  Remember your “premises” can extend beyond your front door and include sidewalks, parking lots, company vehicles, bathrooms, hallways, staircases. Inspect your business property regularly and repair any defective conditions.  Also, enforce workplace safety rules.  Unfortunately, no matter how diligent you are, accidents happen.  Thus, you should consult with an insurance professional and maintain adequate levels of insurance.

Utilize your employee handbook. “Utilize” means if you have one, follow it.  Have you read your own policies lately?  One way of avoiding misunderstandings, claims of unfairness, disputes regarding termination, leave issues, vacation disputes, harassment claims, etc. is to have a comprehensive and up to date employment manual.  If you are not utilizing an employment manual talk to your attorney about the benefit of implementing a manual that is properly tailored to your business operations.

Terminate with care.  No one likes to be fired.  At the moment of termination emotions can run high.  Thus, you must approach the situation with professionalism.  Generally, when an employee is terminated it should not come as a surprise.  Good employment practices include documenting performance issues and discussing them with your employees. Before terminating an employee make sure you are following your own policies and procedures.  Also, consider offering a severance amount that may diffuse the emotion of the moment.

Don’t ignore the problem.  It is inevitable that you will run into a difficult client, unreasonable customer, or employee.  Do not ignore the situation.  Resign yourself to completing the contract or project.  Keep your ego in check and remain calm.  Address the situation as best you can and learn from the experience so you can avoid similar customers or clients in the future.

All potential clients are not good clients.  Life is too short.  The reality is that there are times when you know from the beginning that a particular person or client is going to be a problem.  In such circumstances you may well be better served in the long run by declining the work.

Remember, every action has a reaction.  If you are unable to amicably resolve a dispute and you conclude that you must bring a lawsuit – so be it.  But, understand that after you file your lawsuit you are likely to face a counterclaim.  Don’t expect that your dispute will be limited to the issue of your choice.  Your opposition will try to find leverage wherever they can and that usually means that the scope of your dispute will be expanded.  Thus, recognize that you and/or your business practices will be exposed to the public’s eye.  As a result, you should have your house in order before voluntarily getting involved in any litigation.

Understand your risk tolerance and properly insure yourself.  Insurance can provide you with a competitive edge.  Litigation can be time-consuming, expensive, and frustrating.  The litigation process can also impact your personal and business schedule.  Insurance will not prevent you from getting sued, but it can give you peace of mind and some financial security.  In many cases, insurance will cover the cost of an attorney and damages that are awarded.  Talk to an insurance professional about the levels and types of insurance that are right for your business.

About the Author

Jim Timmerman is a founding partner of Timmerman, Beaulieu, Hinkle & Esworthy, LLC.  Jim’s practice focuses on complex business and insurance litigation in Maryland’s federal and state courts.  He also advises individuals and businesses of all sizes on general business and risk management issues. He can be contacted by phone at (410) 649-4440 or by email at jmt@tbhelaw.com.

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