Are You Prepared For a Legal Disaster?

Here’s one disaster you might not have considered in your preps…

A lawsuit.

Yes, a good old fashioned lawsuit can be devastating to life as you know it, and well worth preparing yourself for.

They cost a TON of $$$
They take a ton of time.
They destroy strained relationships.
They consume your thoughts.
They zap your energy.

They suck.

Lawsuits can stem from a number of different sources. Think about it:

  • Pissed Off Customers. If you own a small business, chances are you deal with angry customers from time to time. They don’t feel like they’ve been treated fairly, they’re not satisfied with your attempts to make it right…Boom! Lawsuit.
  • Business Partner. Even though business relationships usually begin with high hopes and the best of intentions, in many cases it doesn’t take much for things to go south. Questions of ownership, compensation, and intellectual property are quick to spark lawsuits.
  • Divorce. Along the same lines as a breakup with a business partner, a divorce can put you in a lawsuit in a hurry. As unfortunate as it is to talk about, this is statistically the most likely lawsuit people have to deal with.
  • Estate Issues. Dividing up physical property of the deceased is sticky business. Even though estates are typically planned out well in advance of someone’s passing, they still prove to be a frequent cause for lawsuit.
  • Dispute Over Services (home repairs, construction, mechanic, etc). What about the contractor or handyman that you hired that never showed up? Or even worse, maybe he showed up and now your house has an extra hole in it? In a perfect world, every contractor would be licensed, bonded and insured, but it’s just simply not a reality.

There are other situations that can land you in a lawsuit, but these are a handful of the usual suspects.

So what can be done?

As preppers, here are a couple proactive steps to consider taking:

1) Consider Legal “Insurance.”

Companies like Legal Shield offer legal services on a monthly premium basis, just like insurance. At the price of roughly $20 a month, participants have access to:

  • Letters and phone calls from a local law office on your behalf
  • Document review (for contracts and documents 10 pages or less)
  • Will preparation
  • Car accident assistance and other motor vehicle related issues
  • Defense representation if summoned to trial (a certain amount of trial representation is included in the plan, and then additional hours are offered on a discounted basis).
  • General legal advice on personal, business, or pre-existing conditions
  • Services not covered in plan are offered at a discount.

Legal Shield also includes additional tiers of service at an additional premium, for more comprehensive legal needs and a specialized identity theft team.

2) Do Business In Writing.

This is kind of a no-brainer, but can be the best defense you have in a lawsuit situation. Some circumstances are harder to do this in than others. The good news is that even handwritten notes, emails, and even text messages can hold significant weight in court, so you don’t have to worry about it being super official.

Email can be a realistic middle ground, especially for business communications. In particular, try to have written record of every conversation where working agreements, responsibilities, and compensation are outlined, and ESPECIALLY when things begin to get tense.

If you have a heated phone call with your business partner or a customer, it’s a good idea to follow up quickly with a brief email that says something like, “Just to recap our conversation from a couple minutes ago…”

3) Consider Mediation or Arbitration.

In many cases, mediation could potentially save you time, money, and a bunch of unnecessary formalities. Additionally, you get a ton more privacy than traditional court litigation (whose records and evidence submitted are public).

However there are some drawbacks.

As with pretty much everything in the legal world, fees apply. And while most people agree that 3rd party mediation is a quicker and therefore cheaper process than public court litigation, it can still be expensive. Typically you will have attorney fees and share the fees of the mediator.

If 3rd party mediation is not a good fit for your situation, you may want to consider a binding arbitration as a final step before filing suit with the courthouse.

Springer’s Final Thought…

Make sure to investigate these options objectively, to decide whether or not they make sense for you.

If you can make it through life on this planet without getting into legal hot water, you are a rare human being. But for the other 99% of us, this is one situation where “an ounce of prevention is worth a pound of cure.”

Additional Resources:

  • If, When, and Where to File a Lawsuit? For a host of information related to demand letters, limitations of each state, filing suit for internet conflicts, determining the validity of your case, and much more.
  • Steps of a Lawsuit–Walks you through the different steps of filing a formal lawsuit in the court system.
  • Legal Shield–Get your legal “insurance” here. Descriptions of various plan options and coverage limits. Figure out if this is something that makes sense for you and your family.
  • Legal Zoom–For low cost and no fuss legal filings such as business incorporation, trademark registering, wills, and more.

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  • Matt

    Hey Dan. Love the article! Good information here! Along with mediation, there is also something called arbitration. I don’t know how familiar you are with this, but it is another form of alternative dispute resolution. It is a lot like mediation, but at the same time, it’s not.

    In mediation, the parties are the ones who come up with the agreement and the terms and what to do if problems arise in the future. All the mediator really does is he/she keeps things moving in a forward direction and also keeps the “power” balanced.

    Arbitration on the other hand is pretty cool. If you are dealing with a time sensitive material, or something that needs to get resolved quickly and it looks like mediation is not going to work (or has already not worked) if the parties can agree on an arbitrator, it will be beneficial for both parties. In an arbitration, the parties can decide the rules they are going to be bound by and also, the arbitrator is going to be a specialist in the area (hence a “better” or more equitable resolution should come about theoretically speaking). The parties can decide if discovery is going to take place (one of the most time consuming and EXPENSIVE portions of a trial) and the parties can also decide how long it will last.

    So, what I am trying to say is arbitration can be a good thing if mediation does not work out. Often times there is an arbitration clause written into contracts and not a mediation clause. So you may not even have the option of going to trial if this type of clause is involved.

    Anyhow, what do I know, I am just a law student and this is in NO WAY intended to be legal advice! Just Matt’s opinion, that’s all.


    • Urbivalist Dan

      The lawyer chimes in! :-) yeah I’m vaguely familiar with a couple of the differences. I always hear arbitration referred to as “binding”, which I’m assuming means that both parties agree to abide by his judgement before it’s even given…Seems like mediation could probably be a good fit for e large majority of “small claims” type stuff that people face…

      • Matt

        Well, yes and no. Arbitration can be good for anyone. You, Me, XYZ company, it does not matter how big or little the claim might potentially be. Mediation is GREAT! I am all about any type of alternative dispute resolution. The biggest difference is the binding aspect like you noted.

        In mediation you are making an agreement, if you and I were mediating, we would come up with the solution and work with it. But it does not mean we are bound to abide by it. The mediation agreement might say something to the affect of “if this agreement fails, the parties agree to mediate the dispute”… or “If this agreement fails, the parties agree to arbitrate the dispute” or any hundreds of variations. But you get the idea.

        With Arbitration, your right, you are essentially agreeing to be bound by the agreement before you go through the process. Which is why it is important for all of us to actually read the contracts we sign… :) Anyway, the difference is this:

        -Arbitration v. Trial: once a decision is made, you cannot appeal the decision (like you can in court) There are a few situations when you can appeal an arbitration decision, but those are very limited. I will leave that up to the real lawyers to discuss. :) BUT, unlike court, like you said, going to Court is EXPENSIVE and TIME CONSUMING. So, you get things resolved quickly and efficiently. Also, unlike Court, judges are very VERY busy people and they hear a lot of cases and are very intelligent people; however, more likely than not, they are not specialists in that area of law that your case pertains to. An arbitrator is. Or at least theoretically should be since the parties are typically able to choose the arbitrator.

        So, when it comes down to it, mediation is GREAT! Arbitration is GREAT! it just really depends on the specific situation you find yourself in. you or the other party may not want to go to arbitration etc etc. But, no one likes to go to court. It is much more amicable if the case can be settled outside of the courtroom. But life happens and sometimes, the only way to resolve the dispute IS to go to court.

        Again… I’m just a law student! What do I know :) this is NOT intended to be legal advice by ANY STRETCH of the imagination. Always talk to a licensed attorney in your state before deciding what to do. AND…. Dont be afraid to call an attorney. A lot of times they will give you a free consultation over the phone. They dont want to waste your time or theirs. So they can give you guidance on if you have a case or not right over the phone.


        • Urbivalist Dan

          Great advice brotha. Especially about being afraid to call an attorney. Most people on the planet are afraid of what they don’t know. If you know what your options are, you can start to formulate a plan instead of feeding the unproductive stress/fear…

          Thanks again, and scream like a banshee!


  • FinancialSurvivalist

    I have legal shield. I’ve had it for almost two years. Although our wills are put together, beyond legal advice, I haven’t needed to use it. I guess it’s like all insurance, you hope you never need to use it.

    • Urbivalist Dan

      Interesting…I’ll have to chat with you more about this sometime. I’m hoping to find some friends that have it, and have actually had to use it. Curious to hear how their experience has been…

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