When things are going well for your business, it's easy to imagine things staying that way forever.
However, phases of growth and prosperity also bring change, and change can bring increased risk, shifts in legal responsibilities, a rise in administration and more room for error.
To ensure your business remains consistently in good legal health, you must keep legal considerations at the top of your priority list — even when times are good. Discover the key legal advice all contractors should hear to keep business thriving.
Comprehensive Contract Management
Contract management is about more than having a signed contract for every supplier, client or contractor you work with.
When your business is succeeding and operations are working seamlessly, it can be easy to assume that your contracts are in excellent condition or to forget about them altogether. Once a contract is signed, it is often not until an issue arises that we think to refer back to the fine print.
However, periods where you are at your strongest provide some of the best opportunities to review your contracts, ensure they align with current industry regulations, help prevent future disputes and are legally sound.
When you conduct periodic reviews, here are some tips for strengthening your contracts:
Use Preapproved Templates
By using preapproved or standardized templates, it is easier to ensure your contracts are completely compliant.
When you complete your contract reviews with a legal professional or attorney, they should have standardized contract templates to work from.
Prioritize Specificity
Make sure your contracts define all aspects of your project and relationship, use clear and precise language, and avoid ambiguity. This way, you are less likely to leave room for guesswork that could lead to misunderstandings and future disputes.
Important aspects to define include:
- The scope of work (SOW): This covers the key details of the project, including task outlines, contract length, deadlines and your responsibilities.
- Project timelines and delay protocols: As well as clarifying project and task timelines, your contract should contain agreed-upon protocols for any delays. For example, there should be agreements for protection if any delays are out of your control, such as due to the weather or other unforeseen circumstances.
- Robust indemnity clauses: Your contracts should clarify who is responsible should someone get hurt while working on the project or any property become damaged. These agreements should be clearly stated and fair to both parties.
- Preagreed dispute resolution: Contracts should state exactly how potential disputes will be handled, such as through negotiation, mediation, arbitration or litigation.
Have Contracts Professionally Reviewed
To ensure your contracts are watertight, you should have them reviewed by a business legal professional or attorney to verify they comply with local laws and protect your best interests.
Attorneys have a wealth of experience in contract formation and can help you identify potential risks and mitigate future liability.
HR and Hiring Best Practices
If business is booming, you will likely need to start thinking about getting more hands on deck.
Hiring during a period of growth is an exciting prospect, but it can also give rise to legal issues and common pitfalls.
To ensure you are continually managing your hiring and HR approach correctly, consider these essential elements:
- Independent contractor vs. employee: Understanding the difference between the types of people you hire can help you avoid misclassifying your workforce, which could lead to major disputes and penalties.
- Compliance with federal and state labor laws: These laws include minimum wage, antidiscrimination laws such as those outlined by the Americans with Disabilities Act (ADA) and safe working environment regulations according to the Occupational Safety and Health Administration (OSHA).
- Proper hiring practices: Ensure your job descriptions are clear and accurate and that all background checks comply with the Fair Credit Reporting Act (FCRA). Provide adequate employee training, such as safety training where required.
Preagreed Dispute Resolution Methods
It is important to know and understand your options for dispute resolution methods long before any real disputes occur.
To prepare for possible future disputes, you should have a preagreed dispute resolution method with each of your clients, subcontractors, suppliers and consultants.
There are many methods to choose from, including negotiation, mediation, arbitration, adjudication and litigation.
The Benefits of Arbitration
Arbitration is an alternative dispute resolution (ADR) method that enables parties to settle their disputes effectively without court intervention.
If you choose arbitration, you will settle your dispute with the support of an arbitrator — a neutral third-party professional, usually with specific expertise in your industry or field. Arbitration is an excellent solution if you need dispute resolution that is fast and cost-effective.
The benefits of arbitration include:
- Efficiency: The arbitration process has fewer procedural requirements than litigation, and parties can schedule their proceedings without the constraints of a court or judge's calendar. Unlike court cases, which can take years to resolve, arbitration cases generally take a few months.
- Cost-effective: A quicker completion time means fewer billable attorney hours and less business disruption, fewer procedural requirements require lower administration costs, and arbitrator fees are often offset by avoided legal expenses for litigation.
- Preserves business relationships: Arbitration is a far less adversarial process than litigation, which focuses less on confrontation and more on collaboration and resolution. This less formal manner of resolution can help preserve mutual respect and foster ongoing relationships.
Arbitration services may not be needed while your business is thriving, but having guaranteed access to such services can give you peace of mind.
Ongoing Access to an Attorney
You don't only need an attorney when the going gets tough. Having access to an attorney can be hugely beneficial, even in times of prosperity.
Attorneys can assist you with ongoing or sporadic legal queries, general contractor legal advice and help you with proactive construction or contractor legal planning, as well as provide routine assessments of your operations' legal health.
Attorneys can provide indispensable advice and services, including:
- Drafting and reviewing contracts
- Assistance in navigating complex employment law
- Help managing employment relations and HR issues
- Strategic advice for long-term business strategies
- Advice on lien rights and enforcement
- Guidance on licensing and adherence to regulatory requirements
- Assistance in dealing with a difficult professional relationship before the situation escalates into a dispute
Access Comprehensive Legal Advice With a Business Consumer Alliance Contractor Membership
At Business Consumer Alliance, our contractor membership program provides comprehensive legal advice for contractors in California to help you protect your business.
Alongside access to our arbitration program, members also benefit from direct access to an attorney for ongoing advice, contract preparation, dispute resolution and more.
BCA does more than help you in your time of need — we bolster your business when times are good to make sure things stay that way.
To benefit from our extensive contractor membership services, reach out to our team or request a legal consultation today.