The simple collection matter involving a 72 year Washington, D.C. grandmother who defaulted on her Washington Redskins’ season ticket contract after the housing bubble burst turned into unwanted media attention.  Yesterday we discussed the legal literacy lesson of never ignoring a lawsuit.  Today we evaluate the role of smoke signals.

To Ms Hill’s credit, she says she did try to get a year or two of her contract waived.  She also says she returned every call she received from the Redskins and even went to their office in person to explain the situation.  She talked to a number of different people but doesn’t remember who.

What’s not clear from the follow-up article reporting on this situation is how many of those verbal and in person contacts happened after the suit was filed.  According to the Redskins’ general counsel, David Donovan, he says the suit would never have been filed or pursued if only she had contacted him or the ball club.  She says she never heard of him until she received an apologetic email notifying her that the judgment against her would be forgiven.  Hmmm.

What could have happened and what can we learn from their situation?

Well, if she had indeed contacted them before the suit and the outstanding receivable still went to collection, it would appear that there was a failure to communicate inside the ball club. 

Outside counsel doesn’t come cheap.  Better information could have avoided the outside legal fees spent on obtaining the default judgment – a judgment that due to business reasons ultimately wasn’t worth the paper it was printed on.  So before you sue make sure you’re aware of all the facts, including the public relations aspects – in this case the appearance of grandma getting tackled by economic forces beyond her control.  It’s like trying to score in the court of popular opinion with a ball that appears out of bounds.  Save your time and money.  

On the other hand, if any of Ms Hill’s contacts occurred after she received the lawsuit, those Redskins employees should have figured out the status of her receivable and let her know that since the matter was referred to legal she needed to speak with Mr. Donovan.  Did someone drop the ball?

Face it, to someone like Ms Hill, speaking to any Redskins employee is the same as speaking to the club as a whole.  To an outsider, the employee is the organization.  The employee has apparent authority.  Moreover, an outsider expects the right hand to know what left hand is doing.

Insiders know that’s often not the case, but that doesn’t mean an organization shouldn’t strive to speak with one voice and refer customers to those who can answer their questions and concerns with the proper authority.  It can be a challenge, I know.  But it’s worthwhile if helps you avoid getting your knees skinned. 

On the flip side, I can understand how when she got the lawsuit Ms Hill might have thought she didn’t need to answer because the ball club already “knew” her situation.  I’m speculating of course, and while that might explain what happened, it still doesn’t excuse it (see yesterday’s post).

And that brings us to today’s Redskins lesson.

Business training tip: Remind your employees about the limits of their authority.  Underscore the need for properly channeling requests and information outside their scope of authority to those people who are truly in the know. 

Consumer tip:  Whenever you’re facing a potential dispute always write down the name and phone number of the person you’re speaking with in an organization along with the date.  It’s even better if you can get an e-mail address and send a note to them afterwards confirming your conversation.

The score at the end of the second half: Redskins 7, Hill 3

It just goes to show you, in the court of popular opinion you can be legally right and still be wrong.

Copyright ©2009, Corporate M.O., LLC.

It started out as a simple collection matter.  A customer had committed to purchase something by way of contract.  They failed to pay.  The company contacted them several times.  When the customer still didn’t pay they sued.  The customer still didn’t respond and the court issued a default judgment.  It’s the kind of thing that happens every day in business.  Only this time it turned into a small public relations nightmare when a Washington Post reporter picked up the story and wrote about it.

The collection matter that caught the reporter’s eye: the Washington Redskins had sued Pat Hill, a 72 year old life long Washington, D.C. resident, a grandmother, and a real estate agent who was a multi-year season ticket holder that defaulted on her promise to buy season tickets because the housing bubble burst and she was broke.

The good news is that after the media flap the Redskins requested that the court vacated the $66,364 judgment.  Note: defaults can accelerate the payments due and trigger interest, attorney’s fees, and court costs.  She had a 10 year contract through 2017 for two prime time seats at FedEx Field and the Redskins were able to recoup the full value of the unpaid contract.  The vacated judgment meant she didn’t have to pay. 

The other good news is that we all have an opportunity to learn some legal literacy lessons from the fumbles on this play.  Here’s what this zebra has to say about it.

Never ignore a lawsuit.  We’ve seen it before and we’ll probably see it again.  Ms Hill says she couldn’t afford a lawyer and therefore never responded to the lawsuit.  That’s a huge legal literacy mistake. 

If you ignore a lawsuit it does not go away.  It will bite you in the end zone.   That’s because once a suit is filed the judicial machinery is engaged.  The wheels start turning and the case takes on a life of its own.  There are deadlines.  If deadlines come and go and no one, not even you, is there to tell your side of the story, your side doesn’t get heard.  It’s that simple.  The only thing the court hears is the other side and that means they automatically win.  It’s called a default judgment.  You lose.  Case closed. 

Even if she couldn’t afford a lawyer, Ms Hill had some options.  She could have contacted legal aide.  She could have looked for a lawyer (perhaps another diehard Redskins fan) who would have taken the case on a pro bono (free) basis.  Or she could simply have shown up in court herself to explain the situation.

Unfortunately, Ms Hill isn’t the first person to ignore a suit and wind up with a judgment against her.  We recently saw, for example, how ignoring a case resulted in a $4.1 billion award.

You can’t score points if you sit on the sidelines.  So unless you can afford to loose, suit up when a suit is filed.  Show your face in court, get someone to do it for you, or at a minimum call the lawyer who filed the suit.  Their name and phone number is right there on the court papers.  Ask what they really want and try to resolve the case before a deadline comes and goes.

Ms Hill admits she ignored the lawsuit.  That single mistake caused a lot of aggravation.

The legal literacy score at the end of the first half: Redskins 7, Hill 0.

Come back tomorrow for part 2 when I discuss smoke signals and other mixed messages.

Copyright ©2009, Corporate M.O., LLC.

Today I was reminded of a bad date I went on many years ago in the pre-cell phone age.  We were supposed to meet in front of a Greek restaurant for dinner.  We were both on time and we both thought we were at the front entrance.  Mine was on the pedestrian mall side.  His was facing the street.  The error wasn’t discovered until much later that evening when he accused me of standing him up.  Needless to say, it was all down hill from there.

Today’s reminder of the non-date from hell came courtesy of Monica Hesse’s fun article in today’s Washington Post about how communication styles can sabotage relationships.  Some people prefer text messaging to e-mail.   Others prefer Twitter or a phone call.  If, for example, they ignore their voice mail while waiting for a text message they might as well be standing at the wrong restaurant entrance. There is more opportunity than ever before to get it wrong.

Now imagine if that were to happen in a business context. 

Misunderstandings can easily arise due to terse text messages or lengthy e-mails that lack the intonations of a human voice and body language.  For customers who have little patience, those misunderstandings can quickly escalate from dissatisfaction to conflict to litigation.   

The lesson for businesses interested in controlling their legal risk is to choose their business communication channels wisely (rule #3).  To avoid creating a smoking gun document you’ll want to strive for clarity and accuracy (rule #7); but, to be “heard” and maintain a strong customer relationship you need to be in synch with your customer’s communications preferences.   The best legal risk management strategy marries the two concepts and strengthens the business relationship in the process. 

It’s a win-win.

You need to separate fact from hearsay when it comes to the law.

Michelle Singletary, Personal Finance Columnist, Washington Post, February 26, 2009, Before You Buy, Study Rules for New Tax Credits.

Michelle Singletary tells the story of a reader who contacted her because he had purchased a new car on President’s Day, February 16th, the day before President Obama’s economic stimulus plan went into effect.  Had the reader waited, they would have qualified for a tax break that allows new car buyers to deduct state and local sales and excise taxes on their federal returns.

The car dealer told him he would qualify and now he feels duped.  To which Ms Singletary replied:

It’s not the dealers’ fault this person missed out on the credit.  The dealer may have believed the buyer would qualify for the tax break.  And the buyer would have, had Obama signed the bill by President’s Day as was originally planned.  But he didn’t.

That mistake cost this new car buyer $2,000 in lost tax credits.

Could your business be making similar assumptions about the law that is costing it more money than it should?