Heading off Legal Blow Ups in your Business

One of the larger legal issues in recent Denver history has to be the conviction of Joseph Nacchio, the former Qwest Communications CEO, on charges of improper financial dealings.  The case was decided in 2007, but Joe is back in the news because he is suing his defense attorneys for negligence and gross overbilling of items; such as, underwear for the attorney team.  More facts around the case are of little interest to me, but what is thought provoking is that there had to be some hints along the way that Joe was dissatisfied with his defense team prior to the law suit.

 No one likes that kind of legal surprise, and successful managers keep updated on legal training for the myriad of workplace issues – labor laws, discrimination, health care reform requirements, etc.  There are plenty of newsletters, seminars and consultants to keep managers from making costly mistakes.  What most of the classes and other resources fail to include are tips on how to identify and address the many business risks that can lead up to a legal risk.

 Understanding “legal risk” is important for avoiding high legal bills (whether the attorney’s underwear is an issue or not!).  However, understanding “business risk” is more likely to pay off with positive dividends.  Many legal issues begin small which, if addressed early, can be resolved quickly and put to rest.  The cost of not identifying or dealing with some of those seemingly minute issues is the potential for a big legal mess later on.  I’m sure Joe Nacchio’s former attorneys would agree.

 In a blog entry for The Ethical Workplace, Stephen Paskoff says that good managers must “act, communicate, get involved and get help” when trouble begins.  Ignoring inappropriate (not just illegal) behavior, not addressing issues that create conflict and drama, and treating symptoms instead of root causes, all permit small business risks to grow into legal risks.  Given that a 2010 survey of federal employees revealed that just over half of them said their leaders’ maintained high standards of honesty and integrity, and only about two thirds said they had trust and confidence in their supervisors, good managers can’t afford to be casual about responding to early signs of possible trouble.

 Paskoff suggests that managers must model the right behavior if they hope to improve the percentage of employees who have confidence in them.  Managers must consistently communicate their expectations around professional behavior and company values, actively listen to employee concerns, take prompt action when needed, and watch how they speak or act.  J. Alex Sherrer, in his article Combatting Workplace Negativity, says that “There’s a legal risk to us and our company [if we fail to act] because negative people are more likely to harbor bitterness and seek retaliation when they feel they’ve been wronged.”

 Managers who spend time and resources to learn about effective conflict resolution, avoiding or treating workplace negativity, and preventing problems are making a good investment. Increased trust and confidence from your employees lead to increased communication which can head off legal issues.  Incorporating that into the company culture and making it a daily practice (and not just a response to a problem situation) helps reduce the business risks posed by a workforce that resorts to the legal system to get issues resolved.

 Having and acting in accordance with company or personal values may not result in a life free of legal entanglements, but it can result in a more positive work environment in which good managers aren’t focused on internal risks, but have the time to address other business opportunities.

 Nancy Lane, Director of Human Resources, Red Book Solutions

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