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Proper Planning Prevents Future Costs

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February 02, 2017

Proper Planning Prevents Future Costs


As a litigator, I often encounter clients once they have reached the “point of no return” in a dispute of some kind, with either a lawsuit having been filed or with filing imminent. Once litigation begins, costs add up quickly as the strategy of how to handle the lawsuit is developed and discovery starts. As the litigation is playing out and costs are building, it is typical for me to be asked, “How could we have prevented this mess?” The answer is usually a simple one: with proper planning. While planning may not prevent all lawsuits, it sets clear expectations and shows the intent of the individuals involved, removing ambiguity and thereby eliminating the types of disputes that often lead to litigation.

Proper planning takes many different forms. For instance, in the business context, it means not only thinking about the problems the company is facing today, but also about what problems there may be in the future. Planning involves thinking through issues with third parties, employees, and business partners. Contracts can eliminate confusion between parties by clearly setting forth each party’s rights and responsibilities. Employee handbooks can set clear expectations that need to be followed for employees.  And among business partners, there are a host of potential problems that can be adequately addressed long before the potential problem arises. For instance, discussions should be had regarding when and how partners will exit the business venture, and what the departing member should be entitled to.  Further, business partners should agree on how management disputes should be handled in the event of a stalemate when it is possible for there to be an equal percentage voting for and against a certain action.  Moreover, although discussing how business disputes will be handled is critical for the success of the business, it is not enough to merely think through these problems and their solutions; it is imperative that the solutions are formalized and documented.  Signed contracts should be maintained with third parties; employees should sign an acknowledgment that they received and reviewed the employee handbook; and business partners should formalize their solutions to potential problems in an operating agreement or some other formal business document, like a corporate resolution or shareholder agreement.

While it may be most evident in a business context, proper planning is not limited to business dealings. In real estate, proper planning involves having a purchase contract that specifically sets out who will be responsible for what. In the landlord-tenant context, it involves having a written lease with tenants to state the rights of both, the tenant and landlord, when and where payments are due, and other important terms. In family law, it could mean executing a prenuptial agreement, which Family Relations Law Specialist, Jennifer Brogan, covered on our blog in January.   In estate planning, it means executing wills, trusts, and powers of attorney to clearly set out your expectations and wishes. Proper planning involves not only thinking through problems, but also formalizing the solutions into written enforceable documents.

Seeking out an experienced attorney is a great investment while you are planning. An experienced attorney will be able to point out potential problems that you may not have considered. Further, they will be able to help you formalize your solutions to issues so that your intent is clearly displayed.  It is not uncommon to hear individuals question the costs associated with proper planning with an attorney. However, the costs associated with proper planning are generally a fraction of the costs that are expended to litigate a case. If you feel as though you can benefit from proper planning, do yourself a favor and schedule a consultation with an experienced attorney. You will not regret that you did.

* This is an advertisement. The information provided here is for informational purposes only and should not be considered legal advice. You should consult an attorney for legal advice regarding your particular situation.