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A Fight or Flight Reaction Frivolous litigation is a fear that strikes the heart of every business owner. Here's what you can do about it.

By Paige Arnof-Fenn

Opinions expressed by Entrepreneur contributors are their own.

A recent roundtable discussion with several CEOs of successful businesses raised the question of what keeps a leader up at night. The major fear factor for the group wasn't terrorism, the economy, labor shortages or global warming; it was the threat of frivolous litigation. It's an unfortunate state of affairs when ethical entrepreneurs and business leaders decide to ignore dishonest customers, clients and colleagues rather than engage in a lawsuit.

You may think litigation only happens to other entrepreneurs but in reality, it can happen to anyone. One CEO told the group about a former employee who instead of admitting that his boss made enormous accommodations for him during a lengthy family illness, tried deflecting attention with comments about his boss' lack of support. The implied threat of not fully supporting the Family and Medical Leave Act sickened the executive who had battled his own family health crises during that same period. Another CEO shared a story of a disgruntled colleague who threatened a discrimination suit every time she didn't get picked for a choice assignment.

With the risk of these resource-draining lawsuits, is it any surprise that companies are scared to add to their head count when business picks up? I believe most people are honest, fair and want to do the right thing. It's a shame to let unethical people get away with this kind of bad behavior. So as a business owner, what can you do to avoid false claims and disingenuous behavior?

  • Listen to your intuition. At the first sign of uneasiness, pay attention to your gut and don't discount concerns. The CEO who had the employee with the sick family member had seen the employee blaming colleagues when deliverables were not complete long before the family crisis. The health emergency only exacerbated the problems that had already started to manifest themselves.
  • Only work with and for people you respect and trust. The contracts you have signed are only as good as the people behind them. If you have to involve the courts to get them to honor your agreements, you've already lost. There are lawyers out there willing to find obscure loopholes and file false claims to protect a dishonest person.
  • No matter how much money stands to be gained from the deal, make sure you can keep a clear conscience. It's impossible to instill values in people if they didn't learn them in childhood. Don't waste your time and energy with those who are trying to take advantage of the system.
  • Stick to the data and facts. Don't let the bullies make you react emotionally to their false claims. Even when the truth is on your side, it can be incredibly draining and unproductive to waste time and energy chasing decoys thrown in your path. Therefore, stick to what's concrete and focus on that.
  • Trust the system. The truth does eventually catch up with dishonest people. Those who win the case don't necessarily win in the end. The CEOs agreed that if you can create opportunities and wealth for others, you will always be in demand. Good taste and great ideas never go out of style.
  • Pick your partners, colleagues and clients carefully. If you see those you work with treating others poorly, move on from them quickly because it's only a matter of time before you become the subject of their paranoia, lies and insecurity. Sadly, there are people with limited job skills and talents, who find it easier to threaten litigation and take a settlement than to create real value in the world. As long as you stay innovative and have acted honestly, then you will always be ahead.

These CEOs all have strong businesses and recognize that their success can breed jealously and insecurity from those around them. Don't let the weak links pull you down. Successful leaders stay ahead of the masses, work hard and make smart decisions. They surround themselves with world-class talent, not people who make them feel superior.

This year, I recommend that you find a group of motivated and successful entrepreneurs to help you grow your business and reach new heights. Take the high road, and I guarantee that you won't regret it.

Paige Arnof-Fenn is the founder and CEO of Mavens & Moguls, a strategic-marketing consulting firm whose clients include Fortune 500 companies as well as early stage and emerging businesses.

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