Posts Tagged ‘litigation risk definition’

Litigation Risk

litigation risk

Health and Safety Risk Assessment: A Must For Your Business

In the litigious society we live in, risk assessments have become as necessary for businesses as remembering to stock up on pens. Every business is liable from multi-billion pound corporations to ‘mom and pop’ outfits.
Smaller companies often choose to do these risk assessments themselves although larger companies often choose to outsource it to Health and Safety experts to minimise any potential risks.

In this kind of situations being the smallest company can be extremely hazardous. Even though you stand a much lower risk of being at the receiving end of litigation it can be very hard to be able to be objective and look through a critical eye at a workplace.

A businesses obligation as far as health and safety goes is not necessarily to remove all element of risk but to protect you, employees and members of the public as far as is ‘reasonably practicable’.

A basic risk assessment has 3 major stages:

Identifying the hazards and who is at risk from them.

Decide what course of action is required depending on the degree of risk.

Implement any necessary precautions and make a record.

Once these are complete a regular review is required to ensure that the original assessment was correct and to account for any changes in the workplace.

There are 3 main divisions of hazards:

Environmental hazards: such as pollutions i.e. smoke, grit or dust.

Activity hazards: a hazard that may result from a activity a worker must perform i.e. repetitive strain injury.

Workplace hazards: a hazard resulting from the location or layout of the workplace.

There are thousands of potential workplace hazards, a list of the easy to overlook ones include:

The adequate storage, handling and disposal of potentially hazardous chemicals

Faulty electrical equipment

Loose cabling

Insufficient rest breaks

Wet, slippery, unclean or badly surfaced floors

Poorly lit areas

Inadequate Ventilation

Poorly designed workstations

Inappropriate training or procedures

To help identify all potential hazards in a small company it is useful to get all staff members involved to help to get a range of views on the risks they may face in their day to day jobs.

Once risks are identified classify them as low, medium or high risk. High and Medium risk problems will need to be dealt with immediately. While low risk may require the implementation of new training, procedures or possibly no action at all if current safety precautions are adequate.

Taking steps to minimise the risk of workplace injury may include replacing old equipment, introducing new procedures, modernising training etc. Any hazardous materials that have been identified may be reduced as a risk by replacing it with a less hazardous substance, using it in lower quantities, introducing protective equipment/ clothing or reducing the amount of time people are exposed to it.

In a company with fewer than 5 employees it is not a legal requirement to have a written risk assessment, however it may be beneficial in many circumstances to ensure liability is kept to a minimum and that any future risk assessments have a previous basis to work on. It is a good idea to do an annual review to ensure any new equipment, personnel, procedures or premises changes are accounted for.

Often companies will carry out risk assessments after an accident to ensure that it is not a hazard for which they are liable or that could be a danger to another employee or member of the public.

Risk assessments should be a vital part of your business practices regardless of whether you are going it alone or hiring in a professional Health and Safety company. They protect you as a company in the short term, in the case of litigation and, in the long term, by protecting the health and well being of everyone who steps foot in your businesses workplace.

Done properly, they can nip a problem in the bud. Done badly, they can leave you open to a variety of problems. In a choice between a comprehensive risk assessment or the cost of hiring a good solicitor to sort out all the problems created; the assessment will always be the money better spent.

does anyone know if there are risks to having a tubal?

i signed the paper today to get my tubal litigation after the baby is born, the doc didn’t mention any risks but i reading the paper when i got home and it said “i understand the risks involved”
are there any and if so what are they?
thanks!
i’ll be having a vaginal birth, the tubal will be within the six weeks after the baby.
and I want to get it done instead of my hubby because i wanna make sure i’m not having anymore

Its quite a simple operation,
I had no trouble after mine.

I would have to say though be very sure you want it done,

After 10yrs i am now having mine reversed as ive decieded i want another baby, and let me tell you its more difficult to reverse them and also cost alot.

So just be sure its what you want.

But no as i said its quite simple and takes a couple of days to get over,,all good.

Tubal ligation is a method of sterilization that is used by nearly 40 percent of married couples. It is a simple, safe, and effective permanent birth control method for women.

Sterilization is a serious decision that is made voluntarily.

Anyone considering this should be well informed and understand that it is permanent, and yet not totally 100 percent effective.

Each method has a small failure rate that needs to be understood.

Be sure you understand the process, risks, and alternatives before going ahead with a permanent method.

Tubal ligation is a minor surgery that can be done at any time, even after a birth of a baby or after an abortion.

During the procedure, an area of the uterine tubes is blocked or destroyed, preventing sperm from reaching the egg.

All surgical procedures include risks related to anaesthesia, infection, and bleeding.

Whatever procedure is used will depend on your situation and body.

Many tubal ligation procedures are done using an instrument called a laparoscope.

This instrument is passed through an incision made just below the belly button.

Often another small cut is placed at the pubic hairline to allow another instrument to be used.

The second device can burn, cut, or place clips or loops on the tubes.

Extra damage done by these instruments is possible and considered a risk during surgery.

Once the surgery is complete, small, dissolving sutures are placed in the cuts and steri-strips are applied.

Patients are usually released a few hours after their surgery to recover for a day or two at home.

Pain relief may be required and a temporary light diet may be suggested.

The main benefit of having a tubal ligation is the comfort of knowing you no longer need to worry about using another method of birth control.

Other options for women include all short-term methods of birth control, such as the pill, IUD, barrier methods, and hormone injections.

A vasectomy is a permanent birth control option for men.

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Litigation Risk Definition

litigation risk definition
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Avoiding $50,000 bad debt lessons in your small business

Get your house in Order

As an accountant I have seen client after client learn hard lessons about credit management. In other businesses, as a young player, I learnt my share of hard lessons about extending credit, including a $50,000 one (or two! Slow learner!). After losing $50,000, or more some people are smart, repent of their loose ways, and put in place better systems to manage their credit risk. Some are not so smart and continue on their loose ways, taking a roll of the dice every time they do business on a handshake as to whether or not they will get paid.

This article is your chance to learn from our expensive lessons, and avoid the pain of losing $50,000 which as you know, is a representative amount – it could be more or less.

While there is no guarantee and fail safe system other than requiring prepayment, there are many steps you can take to significantly reduce the risk of not getting paid.

What you need to know about credit management

1.   Dealing with a company is extremely risky

As soon as you understand how the insolvency laws work in Australia, you understand why credit management is so important.

A company in trouble has three options.

1.  Administration – Pay an administrator to take over, who does not have to pay any debts for 42 days. During this time you cannot enforce a personal guarantee either. After the administration period the company goes back to the directors management or two the next 2 stages.

2.  Deed of Company Arrangement. Pay an administrator to give a certain cents in the dollar to your creditors and then hand the company back to you.

3.  Liquidation – any remaining assets of the company get sold and all debts get wiped. The liquidator takes big fees and the creditors usually get nothing.

The fact is, none of these scenarios are good options if you are the one owed money. Once it has gone to this stage, there is a very high chance you’ve done your dough.

While the law in Australia does make it illegal continue incurring business debts that you cannot pay, the fact is that doesn’t help you in the event a company that owes you money goes down. Litigation against directors for insolvent trading is rare and ultimately it will probably only benefit the lawyers and administrators anyway. Further, the people who tend to do this sort of thing, especially repeat offenders are generally the ones who don’t have any assets in their own name, especially since an insolvent trading action would take years.

A Personal Guarantee is the only effective way for a small business to link a company director to a company debt. It is more effective but not fail safe.

 While it is illegal to advise people how to structure companies to avoid paying their debts, Phoenix advisers do exist. (A Phoenix is a mythical bird who catches on fire then re-appears). The very existence of these advisers, and the fact that the activity is so prevalent the ATO has a specific department looking at it, should make anyone think very carefully about extending credit to a company.

2. Trust & friendship is not enough

I think another reason people so often get taken for a ride and ultimately burnt, is that they misjudge both the character and wealth of the people who burn them.

The people who incur big debts and then wind up companies and burn creditors, at least in my experience, tend to drive the best cars, live in the best suburbs, dress well and have outstanding personal charisma. And I’m certainly not so paranoid that I think they set out planning to not pay their bills. They are great to talk to and they come across as being sincere and rich. That’s why it’s so easy for you to get sucked in and get burnt.

If your decision to extend credit is on the basis that you feel comfortable with the person, or have a friendship, or are impressed by their out-wood appearance of wealth etc, you are probably setting yourself up for a fall.

The fact is I have seen people burnt by companies that are ASX listed (Still trading), top 200 ASX listed (now liquidated), 10 shop retail outlets (still trading, owners still live in Vaucluse), and by friends and family as well. You’ve heard the saying it’s not personal its business? Apply this to your business. Don’t extend credit willy nilly – be commercial and be careful!

The fact that a person has paid your bills in the past is no indicator that they will be able to in the future. I have seen up close (and terminated the client relationship) company accounts where the amount of debt is continually increasing to a point that you can see that there is a day coming where it will all fall apart and they will be unable to pay their debts. They are still paying some bills but the amount of debt they are taking on is huge. As trust builds, they are receiving more and more credit. Remember – you never know what is going on behind the scenes in your clients finances – the fact they paid your second last invoice in full does not mean that they are not about to collapse leaving you to wear your last invoice.

 3. Know what you are risking

When analysing a sale that you are thinking of extending credit for, you need to know your margin.

Your margin is your ‘gross profit’ on a sale.

Take an example where you sell a computer for $10,000.

If this computer costs you $5,000, your margin is $5,000.

Once you know this you should ask yourself the question as to how much credit you are prepared to provide. In the event that you force the company to pay 50% upfront, and if you collect this payment before you order the goods, you are only risking your $5,000 margin, if the rest goes on terms. The risk to you in this scenario is low – your just risking profit.

If you are going to provide the goods on terms with no upfront deposit, you are risking $5000 which is your cost, and $5000 which is your margin.

In this circumstance, the risk is very high, and so you would really want to have your documentation in order. Your supplier will expect you to pay them, regardless of whether and when your client pays you.

4. Ideal Documentation.

 Ideally you would follow the following process.

i. Pre-determine your credit policy so that you are not making decisions on the fly.

ii. Have a credit application form where companies that want credit from you must apply and specify their company details etc.

–> undertake a credit check to see if other companies have registered defaults against them for late payment or non payment.

iii. Require a personal guarantee, where non payment would damage your business. Make sure you know where the guarantor really lives.

iv. Ensure that you provide a written quote and get it signed.

v. Ensure that you get a delivery docket signed for any goods you deliver to a client.

 vi. Immediately issue a tax invoice to the correct entity.

 The fact is – if you do business on a hand shake, and then someone refuses to pay you, you are in a very difficult position. No documentation will make it extremely difficult if you want to take legal action – and the person who owes you the money knows that.

A good accountant and lawyer can help you put procedures in place to reduce credit risk and avoid the pain that inevitably comes in their absence.

5. How to get paid

i. Get the right documentation in place early.

ii. Apply the persistent widow principle. The bible tells a story of a judge who grants the request of a widow, not because he was a fair judge, but because of her persistence. This principle really works. If your client doesn’t want to pay you simply because they owe you the money – they might pay you because your phone calls drive them nuts!

The company that follows up their debts, gets paid. The company that doesn’t follow up, waits. I know that I have been guilty of being slack plenty of times and not arranging to transfer money to pay bills. If I get a follow up call – I usually feel so embarrassed I fix the bill up immediately.

Young companies are especially loose in this area. Unfortunately, if you don’t establish yourself as a business that chases its debts, people are going to take you for a ride.

iii. Have a clear process to follow regarding outstanding accounts. Here is an example.

 a. Post invoices immediately

b. Send fortnightly statements of account.

c. Follow up all invoices after 14 days with a phone call. Have a script and ask the client to pay via credit card over the phone.

d. Make a maximum of three follow up calls. If the client asks for a payment arrangement, acknowledge that if it’s not in writing, it is not a payment arrangement. Use direct debit for payment arrangements so you know they will happen. Don’t be strict about when the calls are made and limit progressing to the next step. But don’t allow more than a month.

e. Send a letter of demand if any of your follow up calls are unsatisfactory, or if they have been made and the matter is outstanding. If dealing with a company, include an application to winde the company up. While this application will most unlikely be rejected by a court without a judgement, its unlikely the debtor is going to know that, and you never know your luck on the day.

f. Issue a draft statement of claim (they are pretty easy, and you might choose to only use a lawyer in the event the client decides to dispute the claim, if the amount is under your threshold). Send it to the client to show you mean business.

e. Go and register the statement of claim with the court. This only costs $154 and $33 for the sheriff to send it out.

f. Wait and see if the client defends the action or pays. Most clients will either pay or ignore this, because the reason most clients don’t pay is not because they are in a dispute, but because they have avoidance issues and are not managing their finances properly. But feeling sorry for them won’t fix their behaviour or your cash flow problem! Remember, it’s not a payment arrangement if it is not in writing.

Note: at this point you might be thinking of going and seeing a lawyer, and im not telling you not to. What I can do though, having spent $30k in legal fees once chasing a $60k debt (we won for what it’s worth), and having helped numerous clients through the process is give you an idea of what the lawyer is going to tell  you in advance. The lawyer, unless they’re a shark, is going to tell you that litigation is uncertain. That its also final. It is very expensive. The judge is not going to split it in the middle, he is going to nominate one winner. Litigation is uncertain. There is no personal guarantee on legal fees. If you lose, or they appeal, it might be years before you see any money.  In fact either way you should expect to wait at least a year because the wheels of justice turn slowly. Therefore, what the lawyer is going to tell you is simple. If you can reach a compromise with your debtor, do it. If you can’t, put $5,000 in his/her trust account, and we can start the process. I felt my case was water tight, and yet the lawyer still forced me at the 2nd and 11th hour(s) to offer to settle and compromise.

g. If the defendant files a defence, engage a lawyer. If not wait for the required period. Then fill out a form called an application for summary judgement. This is where the court gives you a win because the defendant did not bother to defend the matter.

h. After the court accepts and stamps your application for summary judgement you have won. However, you still need to get the money. A phone call at this point outlining that you have won and are about to send out the sheriff, may secure you a payment, although in my experience its 50/50.

There are three general options for an individual. One is to have the money garnished from the defendants pay. To do this you need to lodge a form with the court to make this happen. The second option is to have the money taken from the defendants bank account. Again there is a form for this – but I have heard that this is a more expensive option and the bank only tries once. The third option is to have the sheriff collect the debt. What this means is that the sheriff will go to the address of the debtor and seize and sell goods to get the money to pay you, and to cover his own costs.

It is slightly different for a company. The issue is that company owners can play games with the sheriff. They can tell the sheriff that the company doesn’t own the goods, that they are leased, etc etc.

For a company there is a different collection weapon, called winding up the company. Winding up the company means appointing an administrator. It is highly likely that this is the last thing that the business owner wants. While it might be inevitable for the company, the business owner will delay it as long as possible. Therefore there is a good chance even in a struggling business that threatening to wind up the company will help you get your money. Just hope that the company makes it 6 months past the preferential payment window!

6. Credit Insurance

I tell clients to get credit insurance regularly. I rarely see them take it up. Credit Insurance allows you to pay a percentage of the sale amount to get the insurance company to take the risk of payment default for you. The issue you will have is that the credit insurance company will have tight control procedures in place, and so if you are dealing with loose cats, you might find that the credit insurance company wont extend credit where your biggest risk is. But then you have to ask yourself a question… If a credit insurance company wont extend credit to someone – why should you? Oh, that’s right. Because your a loose cat as well. (I interviewed a tax client during the week who was new to the country and didn’t speak much english. “What is a loose cat?” he asked me.)

7. Horror stories

After only 10 years in business I have seen far more than my share of horror stories.

I’m so tempted to publish an article naming and shaming business owners who have burnt so many creditors, and yet are still doing better than ever, living in vaucluse, owning a great boat, advertising on tv, taking home big salaries. But ultimately, naming and shaming isn’t going to add value to anyone’s life – when the best way forward is to forgive, move on AND LEARN for the future.

As a young player I had to learn some hard lessons, and it has definitely toughened me me in the area of credit risk.

Now, almost every day of the week, I see new business owners neglect credit management, and end up initially with cash flow problems – they are owed all this money and looking great on paper – and then with actual profitability problems, when they get burnt. Some times it feels like its all moving in slow motion. Some listen to advice and take steps to get their house in order. Some know it all, dont listen, and learn for themselves.

People get burnt in all sorts of circumstances. But often it is with a company that they dealt with over an extended period of time, built repore with the business owner, and let their guard down. The fact that someone comes from a wealthy family, that their business has been trading for 70 years, and that there turn over is one that you could only dream of, offers no protection. For all you know they owe $2million dollars to their creditors and all their assets are in their wife’s name/trusts.

Cash is king. Either get paid upfront, or make sure that you can afford to write off what ever credit you are extending. And watch your cashflow. Paper profits mean little when you dont have the cash to pay your bills.

We don’t live in the ideal world  we live in the real world (but lets keep working on making the transition).

Businesses extend credit. If you are in an industry that expects you to extend credit and where you are risking more than your profit – you should seriously consider either getting credit insurance or getting out of that industry. Seriously.

If you are in a business where you are mainly risking your profits – don’t neglect the chasing up of your customer payments. The difference between collecting in 2 weeks, and 2 months can be a huge one in terms of your cash flow.

If you are in a business where you dont take a big risk by extending credit, all the best. Why are you reading this article again?