7 Easy Ways Your Business Can Avoid A Lawsuit

Running a business can be fun, challenging, and profitable. However, as a business owner, getting sued is never fun. A lawsuit can be time-consuming, costly, and emotionally draining for all involved. For most small businesses, accusations associated with pending litigation can cause serious damage to their reputation.

Civil lawsuits against businesses have gone up over 400% in the last 20 years. It is vital for business owners to protect themselves from crippling expenses and devastating outcomes resulting from an unfavorable decision in court. Here are some ways to avoid being sued and how to protect yourself and your business.

Incorporate your business

One of the most obvious suggestions to all business owners is to avoid a lawsuit at all costs. However, not all situations can be prevented. For example, if an employee is injured on the job, you could possibly be sued for and ordered to pay the employee’s lost wages. If the employee wins the lawsuit, a financial settlement can be collected against your home, bank accounts, and other assets. It is smart to incorporate your business and separate yourself from liability related to your business. This forces the opposing side to sue for only the assets associated with your company in any potential lawsuits.

Get insurance protection

Insuring your business won’t keep you from getting sued, but it can help separate your personal and business finances from the financial strains associated with a lawsuit. Your insurance company can help you cover legal fees and liability costs.

It is important to research the wide range of liability policies offered before making a final decision. Most businesses choose general liability insurance that protects against an employee filing a lawsuit for getting injured at the workplace. Other companies choose errors and omissions insurance that protects against a lawsuit filed by a client due to a mistake made during a work project. Talk with an insurance broker about which liability policy works best for your business.

Draft legal contracts when needed

Businesses of all sizes should use legal contracts drafted by an attorney when dealing with another person or company. This rule pertains to all businesses because a contract can protect your interests in case of a lawsuit. It is important to define the services you’re offering to a customer in order to reduce the likelihood of legal disputes. Legal documentation will show what was expected from each party in a binding agreement.

Keep accurate records

Reputable businesses make it a standard practice to keep accurate records at all times. This process includes recording the time and date of when an agreement was signed, and items discussed at each subsequent meeting. Any communication, including phone calls, emails, and transactions, can be documented. Some businesses limit their record-taking to when a problem occurs that jeopardizes the timely completion of an assignment.

Businesses should have their records state exactly what services were agreed upon with each customer in case of litigation. Those details could include a number of different products or services that were discussed in the negotiating process. Remember, consistent records can be used as a defense in the case of a lawsuit.

Write and implement company policies and procedures

Another important step in protecting your business is properly drafting workplace policies and procedures which may help prevent lawsuits. Instruct your staff to follow these policies because they can be vital in protecting your company. Providing a job manual or employee handbook is the safest route for your employees to learn policies and perform their jobs well.

Be ethical, honest, and moral

It is important that businesses strive to be ethical in their practices every day in order to build a reputation within the community. The goal should be that no client, transaction, or dollar amount is worth jeopardizing your place in the market by bending the rules. Act in a professional manner each time you deal with customers and employees to help prevent being sued.

Provide exceptional customer service

One way to avoid being sued is having great customer service. Some customers may just be upset, and quality customer service can make the difference between calming them down or dealing with a lawsuit. Your staff should be prepared to explain that mistakes are unintentional, but can happen. Proper training with managers and employees can help prevent a lawsuit.

If you think you may need a litigation attorney, contact the experienced Litigation team at Brown & Fortunato, P.C. today. We are experienced in the litigation of labor and employment disputes, oil and gas cases, and other types of commercial and individual cases. Call us today at (833) 228-6300 or Contact Us by email to learn more about our Practice Areas. We are located at 905 S. Fillmore St., Suite 400, in Amarillo, Texas.