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Take Note

Document incidents now, and avoid lawsuits later.

It was a rainy day, and your floors were wet from dripping umbrellas. The customer who slipped didn't appear to be injured; she refused medical attention and insisted she was fine. In minutes, the whole thing was over-or so you thought. But a few months later, she's suing for medical costs plus pain and suffering. And because you didn't make any notes, your insurance company has to try to defend you without any evidence.

Proper documentation at the time could have put you in a much stronger position. If a situation occurs and you think there's any chance that an attorney might become involved, document the incident, advises , an attorney and mediator based in Anaheim Hills, California. "Documentation gives you the ability to cut off [bogus] claims early and to settle cases [you're liable for] more quickly," Searle says.

He recommends establishing a policy so employees know when and how to report and document an incident. As part of the procedure, get statements from everyone involved and all witnesses. Ideally, each should write the report in his or her own words, and sign and date it. Don't attempt to influence the content of statements.

In cases of personal injury or property damage, take photographs. Preserve security tapes that may have recorded the incident and any physical evidence, such as damaged equipment. Store your documents in a secure place. If you ever need the file, your records will significantly increase your chances of a successful defense.

Jacquelyn Lynn is a freelance business writer in Orlando, Florida.

This story appears in the October 2004 issue of Entrepreneur. Subscribe »