How LBM companies can avoid costly litigation
Lawsuits are every employer’s nightmare.
Whether it involves an alleged injury, discrimination, defamation, product failure, workplace dispute or other unpleasant incident, dealing with legal action is never a laughing matter. To help you avoid the worst and hopefully find swift resolution, HBSDealer.com connected with several lawyers and legal experts for their best advice. Here’s what they have to say.
Legal advice on preventing and handling litigation
First and foremost, companies—especially those dealing with heavy or dangerous machinery—should obsess over safety protocols and practices, according to Wyoming-based attorney Mark Pierce. “To protect themselves and their employees, companies in the hardware, building supply and lumber industries must focus on quality control, regular safety audits and clear contractual agreements.”
In Pierce’s 30+ years of experience, he finds that the most common lawsuits within LBM industries—which are typically related to worker injuries and product liability issues—can often be mitigated “by strictly adhering to OSHA guidelines, carrying out frequent equipment maintenance checks and ensuring transparent documentation of product quality and origin.”
If you do get sued, don’t do anything rash. “My key advice is to retain qualified legal counsel immediately and reduce panic by adhering to the prescribed legal processes,” says Pierce. Settlements are always an option but should be considered only “when potential damages from litigation outweigh the settlement cost, factoring reputational damage, business interruptions and possible punitive damages.” However, he warns that each case is unique and requires a detailed cost-benefit analysis to determine whether a settlement is advisable.
Being proactive is an essential part of avoiding unwanted lawsuits, according to Jonathan Freniak, general counsel at LLC Attorney. To get on the front foot: “Firstly, implement rigorous safety protocols, and provide frequent safety training to employees to minimize workplace accidents,” he says, adding that “Risk assessments are also crucial to identify areas of vulnerability before they escalate into legal issues.” All of that preparation and legwork may cost money up front but can save your business from potentially disastrous consequences.
Have lawsuits affected your business?
Did you settle out of court? What impact did legal action have on your business? Have certain laws or regulations had an impact on your company? Have your say: [email protected]
Finally, Freniak says, companies should maintain comprehensive and up-to-date records and pony up for “robust” insurance coverage to ensure an additional layer of protection.
In terms of litigation, “premises liability claims” are quite common within the LBM industry, says Freniak, and should be fiercely guarded against. Any onsite accidents (from a slip-and-fall to more serious incidents) can lead to potential lawsuits, whether from an employee, vendor or customer. He also says that product liability suits are common within the industry, whether due to the sale of goods deemed defective or unreasonably dangerous.
Freniak also stresses to not panic when served with paperwork. “When a lawsuit does occur, the key is staying calm and promptly notifying your insurer and attorney. Assessing the strength of your legal position and potential reputational impact should guide whether it's advisable to settle,” he says. Proposing a settlement could be a “more pragmatic option than engaging in lengthy and costly court proceedings, particularly when defending could lead to deleterious publicity.”
Last but not least, he says to consistently consult with reliable, responsive legal counsel to monitor the status of relevant laws and regulations in your region, such as the “Innocent Sellers Act”—which may shield sellers of a product if a manufacturer was at fault. “Staying ahead of legislative changes and regional differences in laws can dramatically reduce exposure to potential legal headaches down the line.”
Insurance should certainly be a chief concern for LBM companies of all stripes. But which kinds? Least of all don’t skimp on liability coverage, according to Ben Michael of M&A Criminal Defense Attorneys. “When it comes to lumber companies or similar companies that involve manual labor and operating machinery, there can be a greater risk for lawsuits due to accidents and injuries. So, one of the best preventative steps you can take here is to have comprehensive liability insurance.”
If you run a larger operation, it may also help to have someone in-house. “It is also valuable for businesses to have an attorney or legal expert on staff so that they can make sure that their actions are all legally compliant and that they are mitigating risk,” says Michael.
Ultimately, it all comes back to creating and maintaining a safety-first culture, says Steve Sacona, an experienced legal writer. “Prioritizing thorough training on equipment operation, hazardous material handling and workplace cleanliness can considerably reduce risks,” he says. That means investing in consistent inspections, thorough safety protocol documentation and proper maintenance of tools, machines and facilities, which can all be a bulwark against litigation.
When confronted with a lawsuit, it’s paramount to seek counsel from a legal expert who specializes in your particular business niche or who knows the ins and outs of your specific kind of lawsuit being filed (such as a personal injury or product liability expert). Seasoned legal pros can “provide invaluable guidance in charting the most effective course, whether that involves negotiation or courtroom proceedings.”
Again, it all comes down to being prepared, proactive and ready for whatever legal action may arise. “By adopting these proactive precautions, businesses can protect themselves and their employees—all while reducing legal risks.”