From: Cleaner Times

Excerpted from: Cleaner Times (ISSN # 1073-9602), The Journal for High Pressure Water Applications, October 2004,
Pages 72, 74, and 76

 

HOW TO AVOID LAWSUITS

by Diane Calabrese

The U.S. Chamber of Commerce reported earlier this year that lawsuits cost small business $88 billion in 2003. This staggering sum stems from successful defenses as much as from actual losses. Sadly, an entirely frivolous suit can be financial ruin of a company.

To avoid or survive being sued, a power washing contractor must be proactive. Yes, it seems obvious that a generator is a tool and not a toy. And every adult must certainly understand that wet pavement can be slippery.

But in a litigious society, a power washing contractor can take nothing for granted. The signage that warns of potential hazards is as important in keeping citizens advised - or giving them fair warning, as it is in meeting OSHA (Occupational Safety and Health Administration) and other federal regulations.

"There isn't any substitute for everyone understanding up front" the parameters within which they are working, says Patricia S. Eyres, an attorney and the president of Litigation Management and Training Services, Long Beach, California. Setting boundaries ranges from providing advisories about the potential for slick pavement on the safety side of a job to a list
of expected results on the performance side.

Imagine the homeowner with a ten-year old coating on the exterior of his dwelling. The coating can be washed and cleaned, but it is unlikely to look precisely the way it did a decade earlier.

"I would say the biggest challenge for any business in the high-risk service sector," says Eyres, "is to make sure that they discuss with homeowners the results, expectations." And don't stop there, she explains. Put it in writing.

Getting it in writing too often involves just the time, date, service to be rendered, and the corresponding fee, says Eyres. The client must sign off on the agreed outcomes.

 

CLARITY AND CREDIT

Making certain that everyone is on the same page also encompasses the ledger. "Poor cash flow practices" contribute to lawsuits, says Richard A. Solomon, an attorney in Lawrence, New York and the author of Winning in the New York Small Claims Courts, a Simple Step-by-Step Guide for Everyone."

If a power washing contractor is not being paid, the contractor may have difficulty paying his own bills - leading to a potential lawsuit. "When you extend credit, you're essentially handing money to somebody," says Solomon. Therefore, it's imperative to know it will be possible to get the money back or collect on the debt for services.

Since vendors want net payment immediately or in 30 days maximum, says Solomon, a power washing contractor cannot afford to extend a longer period of credit to clients. Doing so could put the contractor at risk for not being able to replenish supplies - imagine being in the middle of a job and not being able to get the materials to finish it. Similarly, with an interruption in cash flow the contractor might be unable to pay the cell phone bill or even to renew a license. Anyone of those lapses could trigger a lawsuit, explains Solomon.

 

HIRE WELL, PLAN WITH CARE

"It's absolute due-diligence" that is the rule when it comes to "hiring the right employees," says Solomon. Employees that do not follow safety procedures when an owner is out of sight or employees that steal business supplies or damage customer property are liabilities.

Absences, tardiness, and substance abuse are all signs of a troubled employee and a person that can cause problems for a business. When a business fails to fire bad employees, it puts itself at greater risk for a lawsuit.

Good record keeping is a must too, says Solomon. Remember to pay insurance premiums and update disaster planning. Insurance must be maintained at a level that protects against the magnitude of losses a business is likely to incur.

The insurance bill must be paid on time. Similarly, says Solomon, businesses must plan for natural and human-caused disasters. Employees should have a protocol to follow. Vital company records should be protected.

 

PREVENTION IS KEY

"I would put a lot of emphasis on prevention," says Eyres. "The law of negligence in most states" focuses on "the failure to exercise reasonable care and skill."

That means that "universally in every state," says Eyre, a "contractor is in a better position than the owner to understand foreseeable circumstances." A power washing contractor that starts a job on a balmy late November day in Fargo, N.D. cannot plead ignorance if the temperature suddenly plummets to subfreezing and a large portion of a pedestrian path ices over, endangering passersby. The contractor would have been expected to check the weather forecast.

"No one wants to go into a job thinking there's going to be litigation," says Eyres. But everyone must, she explains.

"Facts are what they are," says Eyres. "But if the agreement [or] exchange [is] ambiguous," it can be spun by the party on the other side. If someone decides to "spin it," the more lucid records are the better, says Eyres. That means not letting the medium get in the way of the message. Too often today, she explains, businesses communicate via e-mail with an informality they would not use except in an electronic communiqué.

E-mail should not be "cryptic," says Eyres. Instead, it should be as formal as any business record. And a copy of it must be easy to retrieve.

Whichever medium one uses for written confirmation, the essentials are the same. "Communicate effectively," says Eyres, so a building "owner can't say you didn't tell them" what to expect.

The electronic world also raises the issue or working outside the state where a business is established. Working in other states requires attention to the laws and regulations in those states.

 

REACTING

Litigate derives from the Latin word meaning "to dispute." If a client comes forward to dispute a bill, a result, or an occurrence on his or her property, ignoring the claim is not a solution.

"Too many throw away legal notices," says Solomon. Many businesses receiving a notice are confident they are not in the wrong, so they believe they can simply not respond.

Ignoring a legal notice compounds problems. A default judgment can be taken against a business that does not respond." Then, it takes more money, more time, and more advice" to resole the issue, says Solomon. In many  instances, he explains, the first time a business owner knows about a default judgment is when the bank calls.

Coming full circle, Solomon says cash flow is as important to being prepared to defend oneself as it is to paying vendors. For that reason, he puts the greatest emphasis on what a business can do to avoid and survive being sued on cash flow itself.

Good cash flow enables a business to meet insurance premiums on time, to keep the employee manual up-to-date, and so on; or in other words, do all the other things that in concert significantly lower risk. "Lawsuit prevention is the key to business survival," says Solomon.