With cash tight the last thing your business needs right now is a lawsuit. But the inevitable collection difficulties that come with a recession increase the likelihood of a business dispute. Here's 5 tips to help your business steer clear of litigation and handle it effectively if it does happen to you.Not only does the difficulty of collections increase in a recession, but legal claims holding other parties responsible for losses also spike. And the specter of a lawsuit comes at a time when no company can afford drawn out legal proceedings, sky-high attorney fees, and the possibility of a judgment going against it.
Despite these increased risks, attorney Gail Prentiss, a partner at Vanderpool, Frostick and Nishanian, a law firm in Manassas, Va., says that a recession can work in your favor when it comes to legal action as well. "The economic downturn can present a unique opportunity for settlement of legal disputes as people become more concerned about the cost and risk of contested litigation," she says. "Times of economic uncertainty often create a more favorable climate for skilled negotiation and compromise, because both sides are more inclined to value the security and finality of a known result and people are generally more satisfied with an agreed resolution than with a decision imposed upon them by a court."
Prentiss goes a step further and offers business owners these five tips to keep if you do find your company facing litigation in this, or any other, economic downturn:
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