Litigation and Insurance

4. Reducing the Risks

Even if you win the case, the time, stress and disruption involved in litigation can outweigh any financial gains. So a key objective for most businesses is to avoid being drawn into litigation in the first place.

4.1 Obtain legal advice before signing or issuing contracts.

• Draw up a standard set of terms and conditions for sales contracts, and another set for purchase contracts. This avoids the need to seek legal advice on everyday transactions. Any sale or purchase should be made 'subject to the enclosed terms and conditions'.

4.2 Communicate to all employees what your key policies are.

• For example, train all employees who manage, recruit, assess, discipline or dismiss other employees. They need to understand the basic dos and don'ts of employment law. (See Employment law: the basics).

4.3 Be aware of any legislation which specifically affects your business, so that you can comply with it.

• The authorities concerned can tell you what the common problem areas are and how to stay within the law. Your trade organisation can usually tell you what new legislation will affect your industry in particular.