You Will Get Sued
The title of this Unqualified Opinion is what Brent told me when I signed up for this nutty gig (which I wouldn’t miss for the world). The reason is that while he used to think legal conflict was avoidable (“Just treat people well and everything will work out.”), the thing is that people get funny about money. Since it’s a way to keep score, sprinkle on top some ego, some “advisors” with strong opinions, and an attorney (who is probably looking for more work), it’s not hard to see how situations get volatile.
Said differently, you will get sued. And now I’ll turn it over to B…
“The first time I had legitimate legal action threatened against me was right after my first acquisition in 2009 and it involved an employee issue that was black-and-white. An at-will employee was let go for beyond good reasons after repeated attempts to salvage the relationship and many opportunities to make things right. The decision to end the relationship wasn’t a difficult one and the person knew it. But as I found out, this person had a history of being litigious with former employers and openly talked about getting “an exit bonus” based on getting lawyers involved, on contingency of course. This person looked at legal action as a game and knew how to play it.
So having just put all my chips on the line and borrowing a big sum from the SBA, I was faced with a lawsuit for about a third of the total purchase price. That got my attention. And, it kept my attention for months. I couldn’t sleep and struggled with depression. I obsessed about possible outcomes. I worried about affording a settlement or even the on-going legal costs of defending the claim. I stressed about what people would think and fretted about my reputation. I had little margin financially or emotionally and it showed.
Thankfully, the company I acquired had insurance that stepped in to cover the defense of the claim and they settled the claim for a fraction of the claimed damages. The process was brutal, but not because of what actually happened. My attitude and fear made it so. I learned never to meet a problem halfway, especially a legal problem. People will allege all kinds of things for all kinds of reasons. Almost always, very little comes from allegations where there’s little or no wrongdoing. And anyone who has been in business for very long doesn’t pay much attention to allegations, even ones that look bad.”
What’s the guidance?
Find a great lawyer.
Build trust when you don’t need it.
Do the right thing.
Government regulation is such that even if you desperately try to comply, you can’t operate successfully without inevitably running afoul of some rules, some of which conflict with other rules.
You will get sued.
Have a great weekend.
– By Tim Hanson
