[Litigation Issues] Can You Avoid Courtroom Drama?

You can hire the friendliest and most knowledgeable employees, provide the highest level of service and absolutely ooze integrity and goodwill: But occasionally, disputes will still happen. But whether it’s a customer, an employee or a vendor who has a beef with you, you can take positive steps to stop the dispute shy of the courtroom.

"Dispute resolution takes a variety of forms," says Cliff Slaten Esq., who represents pest management firms involved in litigation. "My advice is to avoid the courtroom when you can, taking advantage of alternative means of resolving issues, because litigation can be extremely costly in terms of not only your financial resources but also your time."

Slaten is a founding partner of Slaten & O’Connor, a law firm based in Montgomery, Ala. Slaten concentrates his practice in financial services litigation, product liability, pest control litigation (including bed bugs), mental health, toxic torts, construction defect, lead poisons, and transportation litigation. He spoke at NPMA PestWorld 2009 about dispute resolution.

From Battle-Ax to Trial. In the high-stakes dispute resolution arena of yore, the scenario was typically winner take all. Sword in hand, the involved parties settled conflicts violently and conclusively. And while our modern-day trials might not be pleasant to experience, they’re a far cry from duking it out to the finish.

Slaten explains how today’s trials have evolved even since the days of Perry Mason: "Decades ago, trials saw a lot of ambushing. Your opponent might bring in a surprise witness or piece of evidence, so you had to hire a lawyer who was crafty enough to defend against those surprises. Today, the rules of discovery say that everyone should know what everyone else has — evidence, witnesses, information, etc. If we were playing poker, each party would lay his or her cards on the table and then bet on what everybody has."

Discovery often leads to out-of-court settlements, when it’s clear that one side or the other has the advantage. Problems arise with discovery, though, Slaten says, when one side buries the other in discovery. That approach runs up legal fees and consumes a lot of time. "You should be spending your time dealing with pest management and your customers — not getting wrapped up in some lawsuit," he says.

Alternative Approaches. OK, so litigation is expensive and time consuming. What are some other options for resolving your differences? Slaten highlights five alternative courses of action: arbitration, mediation, negotiation, communication and ombuds.

Arbitration. An arbitrator is appointed to hear both sides of the story and make a judgment. Many contracts specify that conflicts must be resolved by binding arbitration.

Pros: Arbitration can be faster than litigation, and it lessens the probability that there will be a large verdict. In fact, if the judgment goes in your favor, you might end up paying nothing.

Cons: The decision of the arbitrator is final; there is no appeal process. It’s not always cheaper than litigation, because the arbitrator is paid out of your pocket, whereas in litigation, judges are paid through taxes. And finally, arbitration isn’t always faster than litigation, because a significant amount of discovery is allowed.

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Tips for Avoiding Litigation

Want to stay out of court? The following are some precautions you can incorporate into your daily business practices to help ensure timely dispute resolution:

• Communicate with your customers. Listen to them, understand their expectations, explain what you’re doing and be accessible.
• Don’t allow inspection shortcuts. Strict adherence to NPMA, state or other industry guidelines you’ve adopted is critical to your credibility in and out of court.
• Document inaccessible areas. If there are areas your inspectors can’t get to during a home inspection, make sure they document those areas in the infestation report, identifying which area(s) were inaccessible and why (photographs can be helpful).
• Be thorough in every inspection report and day-to-day paperwork. It may not be your technicians’ favorite part of the job, but they need to be diligent about recording their discoveries and actions at each visit. They should be specific about the challenges they encounter as well as the recommendations they make to the homeowner to resolve those issues.

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Mediation. A neutral party becomes involved in trying to resolve the dispute. Slaten says the success of this approach depends in large part on the effectiveness of the mediator. "One school of thought says that the mediator should just serve as a facilitator, taking offers back and forth from the two sides," he says. "But I recommend a more active mediator — one who’s not afraid to tell the defendant, ‘You’re being unreasonable. You need to offer more money, because if you get in front of a jury, you’re going to face these consequences.’ Or to tell the plaintiff, ‘You’re way too pie in the sky. They’re talking real money over here.’ Those are the mediators who can resolve a dispute outside the courtroom."

Pros: You have some measure of control over the outcome and there is finality to it. And, like arbitration, it lessens the likelihood of a large settlement. You may also have the opportunity to preserve your relationship with the other party.

Con: You’ll probably end up paying something. In fact, Slaten says, you typically know that mediation was successful when you think you paid too much and the other party thinks you didn’t pay enough.

Negotiation. In direct negotiation, the two parties, using a variety of tactics, work toward middle ground. Commonly, they start unreasonably high or low in their demands so they have room for compromise. One approach Slaten does not recommend is walking away. "The take-it-or-leave-it approach followed by walking away from the table leaves you vulnerable," he says. "If you say it’s your final offer but then come back for more negotiation, they won’t believe you next time. You have to be careful about how you use various techniques to negotiate."

Pro: Often, you can retain the customer (or preserve the relationship if it’s with a different party).

Con: If the opposing party isn’t really interested in working the matter out but rather intends to sue anyway, you’ve given them leverage by negotiating, establishing a floor for their lawsuit. You need to weigh that consideration as you determine what’s best for your company.

Communication. Communication is as much about dispute prevention as dispute resolution. Many times, customers or employees sue because they feel as though you’re not listening. Talk with your customers and employees, listen to their concerns and explain what you’re trying to accomplish. Many lawsuits arise from misunderstandings. Slaten recommends that you get involved and stay involved in the communication no matter how big your company gets. "If it’s your company, take care of your customers. Develop active listening skills. Sometimes you need to dig down to get to the underlying issue that’s eating at them," he explains.

Pros: Develop mutual trust and understanding. Strengthen your relationship with your customers, employees and vendors. Avoid litigation.

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From Lawsuit to Long-standing Relationship

A North Carolina homeowner took his pest management provider to court, claiming the firm had committed fraud. The customer was preparing to sell his house, and the inspection revealed moisture and termite damage in some of the wood. During the discovery process, though, a review of the pest management company’s reports confirmed that the technician had told the customer year after year that he needed a moisture barrier. The customer thought the PCO was just trying to get more money from him. About a year before he prepared to sell his house, the homeowner installed a moisture barrier himself. Unfortunately, he installed it incorrectly, drying out the crawlspace and bringing the termite damage to light. The pest management company had done nothing wrong, and detailed paperwork exonerated the firm in the mediation. Realizing his error, the customer fired his lawyer and contracted with the pest management company to treat his new house on an ongoing basis.

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Ombuds. Chiefly used at large organizations, an ombuds receives and investigates complaints from customers and/or employees and then reports the findings to senior management to try to resolve the complaints before they escalate into litigation. The role of the ombuds is to relieve the business owner or chief executive officer (CEO) from time-intensive conflict management, which, according to statistics, can take an average of 57 percent of a CEO’s time.

Pro: Enables senior management to focus on the core activities of running the business rather than getting tied up in time-consuming conflict resolution.

FINAL THOUGHTS. Slaten emphasizes that making good hiring decisions and training employees to be proactive in their communication with customers is critical to minimizing disputes. Every technician is a communicator and a negotiator, and if they’re always putting their best foot forward and doing what’s right, you’ll avoid conflict.

The author is a freelance writer in Cleveland, Ohio. She can be reached at ddefranco@giemedia.com.