Gene DuBose’s Four Rules To Avoid Becoming a Defendant

Here are four rules which, if followed, should give you substantial help in avoiding future lawsuits:

Angry people file lawsuits. The logic of Rule One is very simple: If you treat people well, they will not get angry and they won’t sue you. Treat your customers, your employees, your vendors, and – yes – your competitors with courtesy and patience. Listen to them if they have complaints, and resolve their complaints if you can. If you cannot, explain your reasons why. Avoid being defensive or argumentative. Remember that they, like you, are simply trying their best to earn a living, balance their budgets and otherwise muddle their way through life. They may seem to be abrasive, but they may just be having a bad day, perhaps because something awful has just happened to them. Give them the benefit of the doubt. While their complaint may seem a small matter to you, it may be huge to them. Remember that customer service is not only a vital part of your marketing program, it is the first line of defense to a lawsuit.

There are two other categories of people of whom you must be wary: the Crazies and the Crooks. The Crazies are those who will never be happy with you, no matter what you do. Nothing you can do will please them. The Crooks are those who lie, cheat, swindle and cut corners throughout their lives. They poison everything around them

How will be able to spot them? Whenever I get a client who tells me about his or her dealings with a Crook or a Crazy, I always ask them the following question once they have completely finished venting: How did it feel when you were just starting out with them? The answer I get 100% of the time is: Well, you know, it just didn’t feel quite right.

Trust your gut.

This seems both obvious and simple: Follow the Law. This keeps you safe from a lawsuit, because when the Angry/Crazy/Crook goes to a lawyer, the lawyer looks at what you did and says: you haven’t got a case, fugedaboutit. To follow the law, however, you must know what the law is, and truth be told, the law is not always simple.

And please don’t think you know what the law is. Trust me, you don’t. Go to a lawyer and find out what the law is governing what you are planning on doing. Many people think that there is a book out there with all the rules written down and that all the lawyer has to do is look up the rule and tell you whether what was done is legal and illegal. There is no such book. There is only a haystack of court decisions, statutes (federal and state), local ordinances, and agency regulations in which your lawyer will search for your needle. And it only gets worse with every passing year. Congress in Washington DC, your state legislature, your county, your city, and regulatory agencies without number grind out mountains of new laws every year. If your business is highly regulated, you may need to go to a lawyer who is a specialist in that area of law. And while your business itself may not be regulated, what you are thinking of doing may be.

Before you take any major step in your business or your life please, please, please, PLEASE go to a lawyer. Please. Pretty please with sugar on top. Please. For God’s sake . . . please go to a lawyer.

What on earth do I mean by “Be Invisible”? Do I want you to run out and get Dumbledore’s Cloak of Invisibility? Hardly. What I want you to do is keep your name out of public records and fly under the radar in your personal life. Why is this necessary, you ask. I’ve followed Rule 1, 2 and 3, you say. Am I not safe now?

The sad answer is: Nope. Here’s why. The attorney Angry/Crazy/Crook speaks to knows every lawsuit has blackmail power: even if the suit is baseless, the business owner may find it cheaper to settle than to fight. Business lawsuits are rarely about principles; they are always about money. But the attorney will want to know whether you have sufficient assets to pay either a settlement or a judgment. By the way, if you have insurance covering The Angry/Crazy/Cook claim, you will be sued. You won’t have to pay for your defense or the settlement or judgment as the case may be, but you will be sued.

But if you don’t have insurance, the attorney will look in two places to see whether you have assets sufficient to pay his blackmail. The first place the attorney will look is your local real estate records to see what real property you own. Since all states have some form of homestead protection, finding the house you live in may not help him much, but if you own commercial properties or rent houses or a second home, those properties will be vulnerable. The governing rule here is: don’t own real property in your own name.

The second place he will look is the records of the Secretary of State of the state you live in. Why? Because records of every entity operating in your state – whether limited liability company, limited partnership, limited liability partnership or a corporation – are lodged with the Secretary of State. In those records, the lawyer can usually find your name if you are one of the owners or officers of the entity which holds some of your assets. The rule here is basically the same: do not hold your business entities in your own name.

How you make yourself invisible is too complex a topic to discuss in this brief note. Contact me and schedule one of my $100 Special Consultations so we can talk about asset protection strategies.


© 2021 - DuBose Legal · Admitted to the bars of New York and Texas · Texas State Bar No. 06151975