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Are You Litigating Your Business?

In working with business owners and dealing with lawsuits every day, we often see a cross-over between running a business and being involved in litigation. The cross-over results in the business owner running the business as though it is litigation, and we have dubbed this “litigating your business”.

Most people would say that they do not enjoy litigation, so why would anyone want to run their business in a litigation fashion. Litigation is expensive, taxing, and destructive. If you are running a business in a litigation type of fashion, you can change the culture of your company in a negative way and drive off your best employees. In the end, turnover of your employees harms your bottom line.

Below are a few of the characteristics of litigation and how they show up in the running of a business. These characteristics are all interrelated, but are slightly different. For what it is worth, the most likely root of these positive characteristics are traits that exist in many business owners: competitiveness, opinionated, and judgmental. However, those same positive characteristics can also be a hindrance to running an efficient business

Blame – Everything is someone’s fault: In litigation, blame is usually assigned through a complaint. A complaint starts the process of a lawsuit. A complaint, generally claims that the defendant did something wrong.

Application to business: Everyone has probably all seen this in application. Something does not happen the way it is supposed to happen. The easy way out is simply to blame a person. Most of the time, the answer is more complicated than blaming a person. It could involve industry circumstances, whether proper standard operating procedures exist, customer issues, or proper management and oversight.

Interrogation – Cross-examination: In lawsuits, you interview and interrogate witnesses and parties in order to obtain facts to support your case. As a result, many lawyers resort to cross-examination and leading questions in order to put the lawyer’s words into the witness’s mouth.

Application to business: A manager has a preconceived notion how something happened. As a result, the manager will question personnel in a way to generate the answer that he/she wants. We see this frequently in employment matters.

This might be one of the worst things to do in your business and absolutely one of the worst ways to obtain the truth. Generally, the interrogation works in a superior – subordinate manner and the subordinate will do everything possible to retain their job.

Sides – Plaintiff/defense: In lawsuits, people take sides. There is a plaintiff’s side and there is a defendant’s side. Sometimes there are collateral parties, but they generally wind up taking one side or the other.

Application to business: This happens often in ownership disputes. Employees line up in favor of one owner or the other. It also happens between competitive managers as well as disgruntled personnel. This leads to morale problems, as the sides perceive the other side as being treated better than the other. It also creates more and more infighting.

Absolutely Positional – You are either right or wrong: In litigation, a lawyer must take the position that their client is absolutely right and the other side is absolutely wrong. There is no in between. You never want to hesitate as that may be interpreted in weakness.

Application to business: Generally, things are never wrong or right. However, when you have this type of environment, generally, the people on the “right side” are right and people on the “wrong side” are wrong. Consequently, the people on the wrong side never bring new ideas to the table and the people on the right side are never challenged, which leads to nothing more than mediocrity.

Win or lose – Litigation is generally a win or lose proposition. In the end, either a judge or a jury determine whether you were right or wrong, at fault or not. There is no in between.

Application to business: This is very similar to “absolutely positional”. However, in this type of environment results are defined as wins and losses. Wins are celebrated, losses are forgotten, and there is nothing else. However, the wins are usually over-celebrated, while everything that is not win starts to feel like a loss. If you are always losing, why come to work. Losing can be a morale killer.

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