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Nine Steps to Safeguard Against Lawsuits
By Shaila Bringhurst
Two weeks ago Judge Cathy L. Waldorudge approved a $5.08 million settlement against a storage company for auctioning off $8,700 worth of property before the stated deadline.1 In lieu of this and other recent lawsuits, I think we all agree it is important to know how to protect your company. The following is a list of nine things I've found can help safeguard your business.
- Contact Information: A significant number of storage legal issues arise because of insufficient contact information—working phone numbers, emails and, most especially, a reliable alternate contact. Murphy Klasing, a lawyer in Texas, warned about the "nightmare" risks a storage company takes when it doesn't have inadequate contact information. She wrote about one of her clients who sold her house, stored her belongings in a storage unit, and traveled to another country for two years. The management of the facility changed while she was gone, and there was no address, no functioning phone number, and no mention of her leaving the country. When the woman's payments stopped coming through (which was ultimately the storage company's fault), the woman couldn't be reached, and all her belongings were sold in an auction.2 Take the time to make sure you have reliable contact information. Include notes on various customers, especially if he/she travels for work or is in the army and might be deployed.
- Business Insurance: Business insurance is one of the best ways to protect yourself. The Canada Business Network has an unbiased (easy to understand!) website3 educating small business owners on the various types of business insurance. I'd recommend browsing it, even if you have insurance. As a side note, Easy Storage is partnered with an insurance company called StorSmart which can service anywhere in the U.S.. If you want more information on their services, here is a map4 with regional contact information.
- Watch What You Say: "Advertising is legalized lying," HG Wells said—a statement which isn't as true as we might think. The Federal Trade Commission5 was organized in part to enforce False Advertising Laws or the "untrue, misleading, or deceptive representation" of services, property, or goods.6 Watch what you say to your clients! If you promise a climate control unit for half price, you'd better give it to them half price. Always keep a detailed record of any promised cuts/deals, and make sure your company contract agreement clearly defines fees and lock-out procedures.
- Have an Employee Manual: Believe it or not, employees are one of the most common sources of lawsuits.7 They can sue for any number of reasons: not knowing why they were fired, feeling their complaints weren't taken seriously, receiving poor treatment from a manager, being sexually harassed (even just an unwanted hand on a shoulder), etc. One of the best ways to protect against this is to have a good employee manual that each employee is required to read and sign. Most manuals outline expectations for both the employer and employee in the event of conflict. Should you need to hire a lawyer, it will be one of the first documents requested in your defense.8
- Keep your Property Safe: If someone slips and falls on an icy patch of your property, who is sued medical expenses? You are for not having salt down. If a client brings his dog with him to his unit, and his dog bites another client, who is sued? There is a high chance you are sued because it was on your property. Any injuries that occur at your sight can potentially land you in a lawsuit, so keep your facility safe and consider adding a section to your lease that aberrates you from any possible complaints. (See Section 14 of this lease as an example.)
- Write It Down: Keep detailed records of emails, phone calls, or in-person conversations. It can even be as simple as: "John came in today and asked about pricing. Told him the $30/month for the 10X10 units." If John were to ever come to you in the future saying you quoted him $25/month, you would have record of the conversation. Keep track even if you are good friends with the client. Details are easily forgotten with time, and it's better to be safe than sorry.
- Secure your Units: Be aware of how much access your clients have. Many companies have a gate key but not individual unit locks, and even if there are locks, a good pair of bolt cutters can do a lot of damage if someone really wants to steal something . Be sure to abdicate responsibility for stolen items in your client contract.
- Know a Lawyer: Now is the best time to ask around and find a reliable lawyer. Hopefully you never have to hire a lawyer, but if you do, you don't want to be looking while stressed with an impending lawsuit.
- Educate Yourself: Settlement, litigation, deposition: these are words lawyers use on a regular basis, and it is beneficial to have a basic understanding of the legal process. When a person complains and wants to sue someone else, you have a complainant (also known as a plaintiff) and a defendant. So John (the complainant) is suing you (the defendant). You provide your lawyer with documents to build your case. He/she may ask you to participate in a deposition where you are interviewed under oath and everything said is recorded, typed, and provided as evidence. Settlement/Mediation occurs when you and the complainant (with your lawyers) agree on a sum of money which will "close" the case. If you choose not to settle, you enter a stage called litigation where the case is brought before a court. The costs of litigation are astounding, so it is best to settle if possible. For more information, I'd recommend researching civil law prezis.9
1. Ed. Amy Campbell, "Judge Approves $5M Class-Action Settlement Against Self-Storage REIT Extra Space," July 2017, http://www.insideselfstorage.com/news/2017/07/judge-approves-5m-class-action-settlement-against-self-storage-reit-extra-space.aspx
2. Murphy Klasing, "10 Ways Self-Storage Operators Can Avoid a Wrongful Sale," July 2017, http://www.insideselfstorage.com/articles/2017/07/10-ways-selfstorage-operators-can-avoid-a-wrongful-sale.aspx
3. Government of Canada, "Insurance for your Small Business," https://canadabusiness.ca/managing-your-business/day-to-day-operations/protecting-your-business/insurance/insurance-for-your-small-business/
4. StorSmart, "StorSmart Representative Territory Map," July 2017, https://drive.google.com/file/d/0BznWCQRtS8CgRmQ3bkhKZEM4N25PU2xVRktSQnFEWVpsXzJF/view
5. Federal Trade Commission, "Truth in Advertising," https://www.ftc.gov/news-events/media-resources/truth-advertising
6. FindLaw, "False Advertising," http://dictionary.findlaw.com/definition/false-advertising.html
7. Kelly Sports, &"Is your Small Business Prepared for a Lawsuit?" https://sba.thehartford.com/managing-risk/is-your-small-business-prepared-for-a-lawsuit
8. Paycor HR Management, "8 Reasons you should have a Company Employee Handbook," May 16, 2017, https://www.paycor.com/resource-center/8-reasons-your-organization-should-have-an-employee-handbook
9. F.K. "Civil Law" June 17, 2013, https://prezi.com/awsgjqjwvhby/civil-law/