Before you get suedThese days it seems like everyone in America loves to sue each other. It’s not uncommon to feel the threat of this looming – not only because something actually went wrong or they’re upset, but often just to bully you into doing what they want when they want it. The threat of law suit is a bully tactic, and that’s not okay.

When somebody threatens to sue you, it’s like they’ve thrown a hand grenade. All of a sudden, everyone’s in danger.

Unfortunately, it’s something that we designers and developers have to deal with all the time. I don’t know about you, but I’m generally an easy-going guy. I’d love to just get the work done how and when I told the client it would be done – but that’s not always how it goes.

When I first started out, I didn’t have a clue how to deal with these kinds of threats. Over the years, though, I accumulated a set of rules that I live by and highly recommend to any designer or developer who is first starting out.

Whether you’re working freelance by yourself or you have a team who’s counting on you, these are some excellent ways to make sure you’re ready BEFORE that grenade gets thrown.

Pay Your Taxes

I cannot stress enough how important it is to get your payroll taxes in on time. This is the first thing lawyers will try to nail you with as a breach of the corporate veil. Essentially, they’re attacking your character by trying to show the courts that you’re irresponsible.

Keep a Low Overhead

Speaking of taxes, I try to keep my salary at a reasonable level that matches up with my monthly bare necessities. This means that I only pay myself exactly what I need to get by. On the one hand, this means I’m only paying double taxes on a small amount of money.

Pro-tip:  When you own your own business, the profits you make are first taxed for the corporation. Then you get taxed again for any income you claim. If your business is small enough, consider keeping your monthly stipend within the corporate budget.

On the other hand, it means the lawyer looking to sue you won’t have much to work with. He’ll probably tell your angry client there isn’t enough to sue for.

Protect Your Assets

You may be asking, “If I pay myself only the bare minimum, how do I get by?” Well, there are several ways to maximize your company’s assets to keep your personal overhead low. For example, if your business requires a lot of travel, it might be cost-efficient for the business itself to have a vehicle. You pay for the personal miles you log, but the extensive travel and maintenance is covered by the business. The same could be said for an apartment in the city if your business is farther away and needs to keep someone in town most of the time. Yet another way to make sure you’re not paying double in taxes just to get by.

Always Get It In Writing!

This is a big one! Contracts may seem like a nuisance, but they are your best friends when it comes to keeping your head above water. Your client is upset about his package? Check the contract. Upset about a missed deadline? Put it in your contract that every once in a while, things will happen. If he signed it, he has to abide by it.

Pro-tip: I even like to put a few plain-English sign-offs like “I understand that sometimes things happen and deadlines can’t be met,” to make sure the client fully understands what he’s in for.

This is especially important when you’re working with friends. You may think you sound like a jerk by getting her to sign a contract, but in the end, it’s a sure-fire way that everyone is on the same page.

Write Precise Contracts

Getting it in writing only matters when you’re precise. If you say you’ll always finish Project A in 48 hours, then you have to finish Project A in 48 hours. If you’re having trouble writing contracts yourself, check out our Contracts 101 guide.

Read Your Contracts

Once you’ve written your contract, or received your contract, know that it is fully negotiable until both parties have signed. If you don’t like something, change it! You have the legal right to edit out and add to any contract before you sign it. This means you can change the wording to suit whatever your company’s needs are, and if they don’t like it, they can do the same.

But remember: once you sign it, that’s the contract. If you snuck in something and the client didn’t catch it, that’s his fault; but if he changed something and you don’t catch, that’s on you.

Read Your Clients

I can generally tell by the first meeting what kind of client I’m in for. If someone tells me, “I’m going to be an easy client,” it probably means she’s going to try to do most of the work herself and then blame me when it isn’t right. Similarly, if a client asks a lot of questions, I can probably assume he’ll be open to my design suggestions. It takes some time, but once you get used to reading your clients, you’ll be much better equipped to handle their issues on a daily basis. Plus, you’ll know which clients to avoid from the start. I recommend taking down some notes of clients you like and clients who rub you the wrong way for the first year or so until you get the hang of it.

Having someone threaten to sue you can be pretty scary, especially the first time. The most important thing to do when it happens is to take a breath and relax. Chances are, it’s just a threat. Even when lawyers do get involved, the suit usually gets dropped or settles before it ever sees a day in court.

Still, being ready for the worst is always your best bet. Take the time to make sure your affairs are in order, and make precise contracts with all of your clients. When the grenade hits the deck, you’ll be ready.