Few things are more terrifying to business owners than the prospect of a protracted legal battle. But there is a preventive measure that will control the time and cost of defending your company if you are dragged into court: "judgment on the pleadings," which means hiring a trial litigator -- not your usual lawyer -- to inspect contracts with customers, suppliers, and others before you sign them.
Most companies assume their corporate lawyers can handle every contingency. Not so. "There's a certain way you learn to think in court. Generalists can't bring that perspective to a contract consultation," says Marshall Stein, a partner at Boston law firm Cherwin & Glickman.
Think of this move as an insurance policy. For a cost that usually runs around $1,000, you learn how to minimize your legal and financial risks should a future contract dispute land you in court. Typical recommendations include contract-damage limitations and requirements that lawsuits be tried within your own state.
Case in point: One of Stein's clients, a Massachusetts computer manufacturer, sold equipment to a company in California. The purchaser alleged that the products were inadequate and filed a $1.2-million lawsuit in California. Thanks to precautions recommended during a judgment-on-the-pleadings analysis, the judge dropped seven out of eight counts, and the purchaser eventually dropped the case.