Tactics for Avoiding Lawsuits

Originally published: 02.01.10 by Mike Coyne

Education, advance preparation, and communication can prevent litigation.

In last month’s article, we discussed the problems associated with provisions in contracts designed to make contractors liable for consequential damages arising from negligent work. The article led to a discussion in our office concerning ways in which contractors can manage legal risks associated with the services that they provide. We surveyed some of our clients to learn how they work to avoid lawsuits.

We learned a number of good business practices, and all of them involve enhancing communication with customers. I want to share some of these ideas with you.

One of our contractors, who does a lot of work in older homes, discussed the need to manage expectations. Over the years, he has found that some customers with older homes think that a new hvacr system will automatically make their homes as comfortable as newly constructed homes. Thus, he makes a point to say what the system can and cannot do and what other changes to a home are needed to maximize the benefit of the new system. In cases where he is concerned about unrealistic expectations, he follows up his discussion with a letter.

We wondered whether this approach would not scare

away some customers. Our client stated that the key to avoiding that outcome is to provide his customers with a lot of knowledge about their homes and their investments. He likened his approach to the television show This Old House. He strives to make his customers understand that he cares about good outcomes as much as they do.

Another contractor has borrowed an idea from his dentist. Following a big job, he calls his customer to check on their satisfaction. He uses a series of questions designed to learn whether they were satisfied with the work and demeanor of his technicians, whether they understand how to operate the system, whether any unexpected problems have arisen, and whether they are aware of the maintenance that needs to take place. He reminds them to call if they have any questions or concerns.

The same contractor places new customers on a “follow-up” system when maintenance is due. Each customer gets a phone call from the contractor, checking again for any problems and reminding the customer of scheduled maintenance.

Some contractor practices are more specifically designed to manage disputes. One contractor includes a provision for mediation of any disputes or problems with a mediator of the customer’s choice through the local mediation service. (In this case, the local business community offers inexpensive mediation services.) Other contractors we talked to have added arbitration provisions to their agreements, although two contractors complained that arbitration did not seem any less expensive than litigation. We agree with the observation of one of our clients that litigation is always the result of a failure of people to deal with each other reasonably. While he cannot control the reasonableness of every customer, he believes he does everything possible to be reasonable himself and to encourage a reasonable response from his customers.

Michael P. Coyne is a founding partner of the law firm, Waldheger Coyne, located in Cleveland, Ohio. For more information on the firm, visit: www.healthlaw.com or call 440-835-0600.

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Articles by Mike Coyne