Author: dkklaw

What nobody wants to talk about – but every business owner needs to understand.

 

The Scenario That Makes Your Blood Boil

Picture this: You’re facing a potential lawsuit. You have the evidence. You have the law on your side. You would likely win in court. Then the other side’s lawyer calls with an offer that makes you want to throw your phone across the room:

“We’ll settle for $20,000. It’s going to cost your client a lot more than that to defend this anyway.”

GRRRRR. Frustrating? Absolutely. But also… probably true.

Here’s what I want you to understand: This moment isn’t about being taken advantage of. It’s about you exercising control over your business.

 

Reframing the “Loss” as a Win

Let’s get one thing crystal clear: You always get to decide how this goes.

If you want to go to trial, it’s your right and your lawyer should absolutely follow your wishes. But from one business owner to another, let me share a different way to think about this moment.

Litigation is a business decision. This isn’t about right or wrong. This isn’t about justice or fairness.  Just a business decision.

 

The Real Math Nobody Talks About

When you’re calculating the cost of litigation, most people only think about attorney’s fees. But the real cost includes:

Financial Impact:

  • Legal fees (often 2-3x the settlement amount)
  • Time away from revenue-generating activities
  • Potential expert witness costs
  • Discovery expenses

Hidden Business Costs:

  • Your mental energy focused on litigation instead of growth
  • Stress affecting your decision-making in other areas
  • Team members pulled into depositions and document production
  • The opportunity cost of what you could have accomplished instead

Personal Toll:

  • Sleepless nights thinking about court dates instead of business strategy
  • The emotional drain that affects every other aspect of your life
  • The distraction that keeps you from being fully present for your business

 

The Power of “No Admission of Wrongdoing”

Here’s something crucial: Settlement doesn’t mean you’re admitting fault.

A properly drafted settlement agreement includes language stating there’s no admission of wrongdoing by either party. You’re not saying “you’re right and I was wrong.” You’re saying “this isn’t worth my time and energy.”

Completely different message.

 

Timing Is Everything: The Two Windows

There are actually two opportunities to make this business decision, and the timing matters more than most people realize:

Window #1: Pre-Filing Settlement

  • Clean resolution with no public record
  • Business reputation remains intact
  • Faster resolution
  • Often lower settlement amounts

Window #2: Post-Filing Settlement

  • Court record exists permanently
  • Public access to complaint details
  • Customers, competitors, vendors can all see it
  • Higher costs, more complexity

The key insight: Once that complaint is filed, it’s out there forever. Even if you settle the next day, the court record remains. But handle it at the notice or demand stage? It’s like it never happened.

 

Your Strategic Advantage

You have more control over this process than you think – if you know when to exercise it.

Before filing: You can resolve this quietly, completely, and move on with your business focused on what matters.

After filing: You’re playing defense in a public arena with a permanent record.

The Settlement Agreement: Your Shield Going Forward

A proper settlement agreement doesn’t just end the current dispute – it protects you from this issue coming up again with this person. The right language creates a comprehensive release that prevents the same claims from being raised in the future.

This isn’t just buying peace for today. It’s buying permanent protection.

 

The Real Question

The question isn’t “Should I fight this because I’m right?”

The question is “What’s the smartest business decision that protects my company, my energy, and my future?”

Sometimes the answer is to fight. Sometimes it’s to settle and move on. Both can be the right choice – it depends on your specific situation, your business goals, and what matters most to you.

 

Your Power, Your Choice

Remember: This is your decision to make. Your lawyer can advise you on the legal merits and likely outcomes, but you’re the one who decides what’s best for your business.

If you choose to settle, you’re not giving up or giving in. You’re making a strategic business decision to protect your most valuable resources: your time, your energy, and your focus.

You’re choosing to put your energy where it can actually grow your business instead of where it just protects your ego.

And sometimes, that’s the biggest win of all.

The goal isn’t to always avoid litigation – it’s to approach it strategically, with full understanding of your options and control over your choices.

Don’t wait until you’re in the middle of a heated dispute to figure out what to say and do. I’ve created a step-by-step checklist that walks you through exactly how to handle business disputes professionally—from that first angry phone call through resolution.

The “How to Handle a Business Dispute with Grace” checklist includes:

  • What to document immediately (and what NOT to say)
  • When to involve legal counsel
  • How to recognize when someone is acting in bad faith
  • Strategic communication that resolves issues without admitting liability

Download your free checklist here and keep it handy for when emotions run high and you need a clear plan to follow.

 

Photo Credit: Picpedia.com

Last month, a client called me in a panic. A customer was threatening to sue over a $4,000 project gone wrong. “What do I do?” she asked. “I already told them I’d make it right and refund everything. Will that stop the lawsuit?”

It was too late. She’d already made the classic mistake that turns manageable disputes into expensive legal battles.

Here’s what most business owners don’t realize: you’re not just running a business—you’re wearing a target.

The Reality About Business Disputes

The statistics are sobering. Research shows that business litigation impacts 36% to 53% of small businesses annually, with roughly 45% of small companies currently dealing with some form of legal dispute. Even more striking? 90% of all businesses will face a lawsuit at some point.

But here’s the part that keeps me up at night: most of these disputes could have been handled differently if the business owner had known what to do in those critical first 24 hours.

Why This Matters: The average cost to defend a lawsuit ranges from $3,000 to $150,000. Even if you do everything right. Even if there isn’t a strong case. Even if at the end, “you win.” And in many jurisdictions, including California where I defend business owners, the business MUST have a lawyer.  As the owner, you cannot proceed on your own, “pro se” or “pro per.” So, there are legal fees and filing fees even if you end up with a settlement or if the case is ultimately dismissed.   

Why Consumers Target Businesses (And It’s Not What You Think)

There’s a legal concept called the “deep pocket theory.” Simply put, when someone feels wronged, they’re more likely to sue the party they perceive as having money to pay—regardless of who’s actually at fault.

What consumers assume about your business:

  • You have business insurance that covers everything
  • You have cash reserves or “deep pockets”
  • Legal costs are just “business expenses” to you
  • You have lawyers on retainer ready to fight

The reality: Small business owners often have more personal financial exposure than the individual customers suing them. But perception drives litigation decisions, not reality.

This means that handling disputes isn’t just about customer service—it’s about legal strategy. The same response that works great for a negative Yelp review can be a disaster in a potential legal dispute.

The Moment Everything Changes

I’ve seen it happen dozens of times. A business owner gets an angry email or confrontational phone call. Their instinct is to:

  • Apologize immediately
  • Offer to “make things right”
  • Try to fix the problem over text or social media
  • Admit fault to de-escalate the situation

Every single one of these responses can be used against you in court.

That apologetic email you sent to calm down an angry customer? It can be presented as an admission of liability. The quick offer to refund everything? It might be seen as evidence that you knew you were in the wrong. The casual “I didn’t mean for that to happen” text? That’s an admission that can cost you thousands.

What Professional Dispute Response Actually Looks Like

The businesses that rarely end up in my office for litigation defense aren’t lucky—they’re strategic. They understand that the goal isn’t to avoid all disputes (impossible), but to handle them in a way that prevents escalation.

Professional dispute response has four key elements:

1. Immediate Documentation Before you say or write anything, preserve every piece of evidence. Screenshots, email threads, contract terms, payment records—everything. If it’s not documented, it can be twisted or forgotten later.

2. Strategic Silence Your gut will tell you to respond immediately. Resist. Taking 24-48 hours to craft a thoughtful response prevents emotional reactions that often make situations worse.

3. Professional Communication When you do respond, everything goes in writing, and every word is chosen carefully. You can be empathetic without admitting fault. You can be solution-oriented without accepting liability.

4. Early Legal Consultation This doesn’t mean lawyering up immediately. It means getting a quick strategic consultation to understand your real risks and options before the situation spirals.

The Grace Factor: Why Professional Response Reduces Lawsuits

Here’s something most business owners don’t realize; how you handle disputes affects whether you get sued in the future. Businesses known for professional, fair dispute resolution become less attractive targets for opportunistic litigation.

When you respond with grace under pressure, you’re not just resolving the immediate issue—you’re building a reputation that protects you from future legal problems. Word spreads in communities and industries. Customers and competitors notice how you handle conflict.

Your Next Steps

If you’re reading this and thinking “I need to be better prepared,” you’re right. The time to develop your dispute response plan is before you need it, not when someone is threatening legal action.

Every business owner should have:

  • A clear documentation system for disputes
  • Templates for professional dispute communication
  • A relationship with a business attorney for quick consultations
  • A step-by-step plan for those critical first 24 hours

The good news? None of this is complicated. It just requires knowing what to do and having the discipline to follow the plan when emotions are running high.

Download Your Business Dispute Response Plan

I’ve created a practical, step-by-step checklist that walks you through exactly how to handle business disputes professionally and strategically. It’s the same framework I recommend to all my clients—and it’s designed to help you protect your business while maintaining your professional reputation.

The checklist covers:

  • What to document immediately (and how)
  • When to respond (and when to wait)
  • How to communicate without admitting liability
  • When to involve legal counsel
  • How to negotiate professionally if needed

Download your free “How to Handle a Business Dispute with Grace” checklist here. Print it, bookmark it, and keep it handy—because when disputes happen, you’ll want to have a clear plan to follow.

Remember: You can’t prevent all business disputes, but you can control how you respond to them. And how you respond today determines whether small problems stay small or become expensive legal battles.

Photo Credit: Photo by Kampus Production: https://www.pexels.com

Ready to bulletproof your business against legal disputes? Beyond just handling disputes, smart business owners proactively protect themselves with the right contracts, policies, and legal structures. If you’re interested in a comprehensive business protection strategy, let’s talk about how we can help you build a legal foundation that prevents problems before they start.

I had an incredibly sobering conversation this week. It centered around an analogy that stopped me in my tracks—and I want to share it with you.

Imagine a Waterfall…

Now imagine your business is on a river. Some businesses are way upstream, paddling with confidence. Others are drifting closer to a rapid. And some—maybe more than we realize—are already going over the edge. The waterfall analogy is a clear picture of why we need to protect our businesses, “before the fall.”

Here’s how it breaks down:

Above the Waterfall: Calm Waters and Confidence

Many business owners are floating far upstream. They’re doing well—profitable, stable, and maybe even growing. They believe the dock they built will always hold, and the idea that something could “unmoor” the boat isn’t even on their radar. These owners aren’t looking for support—because it doesn’t feel like they need it.

Drifting: A Sense Something’s Off

Then there are owners who feel the current picking up. They know something’s not right. Maybe sales are slowing. Maybe they’re working longer hours, or cash flow is getting tighter. But instead of asking for help, they paddle harder. They’re thinking positive. They’re surrounded by messaging that tells them success is just around the corner if they hustle harder.

There’s a subtle taboo in the business world about saying:
“Something isn’t working.”

On the Edge: The Point of No Return

Some business owners are at the very crest of the waterfall. Everything feels chaotic. The team is stressed, money is tight, and decisions feel reactive instead of strategic. There may be one last chance to avoid the drop—but gravity is real. And unfortunately, many businesses don’t seek help until it’s too late.

At this point, the panic sets in. Some throw everything out of the boat—employees, marketing, even inventory—hoping to lighten the load. Others resign themselves to the fall, believing it’s too late.

At the Bottom: Soaked, Shaken, and Searching

Then there are the business owners I meet most often: the ones at the bottom of the falls. Soaked, exhausted, unsure what just happened. They’re looking for their oars, trying to figure out how to rebuild. 

And while I love helping them recover—crisis consulting is meaningful, life-changing work—I know in my soul my real mission is preventing the fall.

From Recovery to Prevention: A Shift in My Mission

For the last six years, nearly all of my clients have come from referrals—usually after something went very wrong. I’ve been able to help them stabilize, rebuild, and regain clarity. But I want to shift the conversation.  The truth is, there is a ton of shame that prevent business owners from seeking help. 

I want to reach business owners before the drift begins. Before the warning signs become a waterfall. Before an unexpected emergency or lawsuit takes them out.

Why Prevention Matters: Real-World Risks in Business

Let’s give credit where it’s due—the SBA, SCORE, and other startup resources do great work helping new business owners with plans, funding, and mentorship. But what happens after your business is up and running?

The real work begins. That’s when you need:

  • Key man insurance to protect your business in case something happens to you.

  • A clear understanding that unemployment insurance doesn’t cover owners.

  • Legal and HR systems that protect against liabilities.

  • Financial structure, compliance, and operations planning.

  • Strategic forecasting for capacity and cash flow.

If you’re in a state like California, employment law is one of the fastest ways a business can get thrown over the falls. An unexpected claim, a misclassified contractor, or a wage & hour issue can spiral into litigation, penalties, or worse. 

There are a lot of things in the market that business owners cannot control. Regulatory changes, disruptive products and services, employees leaving, etc.  BUT if we are allowing our ego (and shame) to prevent us from taking action with what we can control, we are potentially setting ourselves up for a trip over the falls. 

My Story: Why I Ring the Bell

If you’ve followed me for any length of time, you know the story of UNEQ, the company we lost in 2013 after my husband’s near-fatal accident. That moment changed everything. We didn’t have the protections in place. No safety net. No key person insurance. It wasn’t just a financial crisis—it was a personal one.

I’m not here to fear monger.

I’m here to tell the truth: We often wait too long to get the skills and support we need to run a business—not just start one.

If you’re drifting—or if you’re still tied to the dock but haven’t looked downriver in a while—now is the time. Not to panic, but to prepare.  If you’d like to chat with me about a legal audit of your business in California, just reach out for a consultation. 

 

*photocredit* Maspnet.com Photographer: Esperanza

Running a business without written agreements puts you and your clients at risk for misunderstandings, missed payments, and legal disputes. It’s especially risky in today’s landscape, where chargebacks (where clients dispute charges through their credit card company) can result in the loss of money even if your policy is “no refunds.” Without a written agreement, you’ll likely be forced to refund payments—regardless of your stated policies.

The truth is, contracts, or as I like to call them, business agreements, don’t have to be complicated, written in legalese, or span 20 pages to be enforceable. What they need to be is yours—clear, written in simple language, customized to your needs, and signed by both parties. When I say don’t “copy/paste,” I mean just that. Yes, you can follow templates, but don’t insert language you don’t understand just because it looks professional.  

*** Required disclaimer: This is not legal advice, meant for educational purposes only, if you have a contract matter- please discuss with an attorney***

Okay, now on to our discussion. 

Here’s what your agreements should include:

1. Be Clear and Keep It Simple

Nobody likes legalese—trust me, nobody. Skip the formal jargon. If the agreement is for six months, say that directly. If there are four monthly payments, spell that out. People want clarity, and your agreement doesn’t need to be fancy to be enforceable. In fact, you can have a legally binding agreement on a napkin (there’s a famous case about this!). But, for professionalism’s sake, keep it concise and clear.

2. Use the QTIPS Framework

To ensure all bases are covered, use the QTIPS framework to guide you in writing your agreements:

  • Q: Quantity (6 sessions, 2 products, etc.)

  • T: Time of Performance (15 days, 6 months, etc.)

  • I: Identity of the Parties (Who’s involved? You and your client? Identify them!)

  • P: Price (What is the cost of the services/products?)

  • S: Subject Matter (What are they buying? Coaching? Products? Services?)

With this in place, there’s little room for confusion. For example: “This agreement between Me and You is for six 30-minute life coaching sessions over six weeks for $350.” All terms are clearly laid out.

3. Spell Out Your terms

This is a common area where business owners often leave gaps that later create headaches. If you have a no-refund term, write it down. If there are time restrictions for rescheduling (e.g., within 48 hours), state that upfront. Similarly, if you require deposits, payment in full before certain services, or have any other terms, include them in your agreement.

It’s far better to have customers review your contract terms before purchasing, rather than dealing with disputes later. Trust me, it’s less stressful to turn someone down upfront than to face a chargeback down the line.  And without getting too legally for you, we often treat policies and contract terms as different. 

Generally, we describe policies as applying to everyone equally in your business, regardless of the products or services they contract for.  “Our policy is to require 48 hours’ notice to change an appointment.” But a contract is between you and the other party specifically (QTIPS). You can negotiate a term. “I’m requesting the option to provide 24 hours’ notice to you due to the nature of my business.”  That term can be negotiated in an agreement between the two of you. 

So, if you are relying on your websites’ policies to fight a chargeback or otherwise prevent a refund, and it is not a term in the contract, there might be some stickiness with certain payment platforms or credit card issuers.  Please check with an attorney if you need guidance in this area. Us lawyers had weeks and weeks and weeks and weeks of law school and legal cases to read (I know, I’m exaggerating, or am I?) on the exciting world of contract terms. Exploring the exotic world of, “what terms are included in this scenario? That one? Is that an Oxford comma?”

4. Get Any Changes in Writing

Changes will happen. Whether it’s a change of schedule or an amendment to services, always get the changes in writing. Even something informal like, “We’ve agreed to change the dates for yoga sessions” should be clearly documented.

At a MINIMUM send an email documenting the changes to the agreement. You can send an, “I’m just following up our phone conversation with this email to ensure we have everything clearly documented……”  At the end of the email., “If you see something I left out or need to change, please hit reply and let me know.  It was great speaking with you earlier today.” Please do this as you get off the phone- not two days later. If you know that you will not get to it right away, have excellent notes. 

Even better? Send over the changes in a separate document, and you both sign.  Create a word document, send it to the other side, once it’s absolutely captured the changes, make a .PDF, send for signature or e-sign. As much as possible, keep everything signed and dated to avoid confusion.  Don’t rely on memory or scribbles on your notepad—put it in a formal writing!

5. Be Prepared to Enforce the Agreement

This part of business isn’t easy, but it’s necessary. You have to be prepared to enforce your agreements if the need arises. In my own business, I allow clients to pause services for a month or two if life happens—but we don’t just “cancel” agreements because life got in the way. We finish what we agreed to. My livelihood depends on it, and your business should be treated with the same respect.

You may never need to enforce an agreement, but if it comes to that, be firm. Ensure your agreements are followed and recognized.

6. Get Professional Legal Review for Complex Agreements

For more complex agreements, like buying or selling a business, purchasing or leasing equipment, or drafting partnership agreements, always consult an attorney. These types of agreements often involve significant risks, and it’s essential to get them right from the start.

If you can’t afford a full-time attorney or don’t want to hire someone long-term, there’s an excellent online resource called Contracts Counsel. This platform allows you to hire attorneys on a project basis to review or draft legal agreements tailored to your specific needs. It’s an affordable way to ensure your legal documents are in top shape.

A Final Note

While hiring an attorney may seem like an extra step, it’s an investment in the long-term stability and success of your business. Having a clear, legally binding agreement not only protects you but also gives your clients peace of mind, knowing that both parties are aligned in terms of expectations. Don’t let a misunderstanding or poorly crafted contract harm your business—take control of your agreements and protect your interests.

For California Business Owners

If you’re a small business owner in California and need help reviewing or drafting your contracts, I’m here to help. Reach out for a consultation, and we’ll ensure your agreements are legally sound and protect your business.

In the wake of the pandemic, many businesses had to pivot, and for some, the decision to close their doors can feel like a failure. We’re conditioned to think that shutting down a business is a sign of defeat, but that’s simply not the case. Closing a business can be a power move—one that allows you to cash out of something you’ve built but that no longer serves you or your goals.

I’ve been there myself. As a serial entrepreneur, I’ve voluntarily closed businesses that were no longer in alignment with my family’s needs or my personal vision. It’s a decision many entrepreneurs face, and while it can be difficult, it’s often the smartest choice in today’s fast-changing economy.

Why Closing Can Be the Smartest Move You Make

Today’s economy looks vastly different from even just a few years ago. The pandemic changed how we do business—what we need, how we operate, and how we connect with customers. And while many businesses are thriving post-pandemic, others have struggled to adapt. Smart entrepreneurs know when to walk away and realize that closing is a way to preserve energy, financial resources, and personal well-being. Holding on for the sake of obligation or emotion can quickly lead to financial distress, burnout, and unmanageable stress.

Here are a few instances when closing a business can truly be a power move:

1. The Market Changed, But You Don’t Want To

Back in 2018, I closed my business, At the Ready Publications, LLC, which published “The Online Magazine for First Responders.” Initially, the market for niche online publications for first responders was strong, with a unique position as a free, digital magazine targeting rural areas. But over time, larger competitors entered the space with more robust offerings, bigger subscriber lists, and stronger sponsorships.

In 2019, two of the biggest players in the industry decided to go fully digital, and it became clear that competing for attention in this crowded, high-resource space wasn’t the right move for us.

So, we closed up shop, cashed out, and dissolved the company—without regret. Recognizing that the market had shifted and that we no longer wanted to compete in that arena was an empowering decision.

2. Your Client’s Needs Changed and Your Business Has Run Its Course

When a business is solving a problem, it can thrive for years. But what happens when the problem is solved or when customer needs change? One of my ventures, Dragon Slayer Tutors, supported law students with the unique challenge of preparing for the “Baby Bar” exam in California. My niche was law students, particularly working adults with families, navigating the challenges of law school.

In 2020, however, my alma mater’s accreditation changed, and the state bar removed the requirement for students to pass the Baby Bar. As a result, my business model became obsolete almost overnight. Additionally, many law schools started offering fully accredited online law programs, so the landscape on online legal education changed significantly, and many law programs offered remote tutoring and study opportunities. 

Rather than fighting to keep it alive, I recognized that my services were no longer needed by the market, and I stepped away. Instead of feeling bad about it, I was thrilled that my clients no longer needed this particular service. Letting go was a smart decision, not a failure.

3. The Business No Longer Serves You

As a business owner, you are the master and commander of your company. You decide what your business looks like, who it serves, and how it operates. But what happens when the business no longer aligns with your lifestyle, goals, or passions?

I’ve seen many business owners, including a boutique owner and a restaurateur, close their businesses simply because they weren’t having fun anymore. Maybe they’ve outgrown their original vision, or the financials have changed, making the venture no longer profitable.

In some cases, it’s a desire to regain work-life balance—perhaps taking a step back to focus on family or stability, such as returning to a traditional job for health benefits. This can feel difficult, especially in a culture that promotes relentless hustle. But closing a business to align with your personal goals is a power move.

4. Your Business Evolved Into Something Else

Businesses, like people, are meant to grow and evolve. And sometimes, that means closing down one venture to give way to the next.

In my own business, I’ve evolved from solo law practice to a 2-attorney firm practice, now back to solo practice and have refined my areas of focus over the last ten years. I no longer practice as much administrative law, mostly small business.  While it feels like a significant shift, it’s not a failure—it’s an evolution. 

This is something I see regularly with other entrepreneurs as well. As the markets change, we need to change. Law professionals change areas of practice.  Caterers offering a takeout meal service every week.  A previous career coach becoming an HR Consultant. A jewelry designer adding on a brand management service for other designers. Instead of seeing these evolutions as failures or “closures,” let’s start normalizing them as growth.

Changing the Narrative: Closing Isn’t Failing, It’s Evolving

In today’s economy, where so much is in flux, understanding when to pivot, close, or evolve your business is more important than ever. It’s time to embrace the idea that closing a business doesn’t signify failure—it can be an empowered decision that positions you for the next chapter of success.

So, let’s normalize closing a business as a power move. Rather than seeing these transitions as negative, we should celebrate them as evidence of adaptability and growth. As entrepreneurs, we don’t have to cling to the past; we can create the future.