A lawsuit can bring your business to its knees and stop your business as you know it. Years of hard work, sacrifice and diligence can be wiped away with one adverse judgment stemming from only one incident. Even under the best circumstances, a lawsuit can be costly and distract you from growing your business. Businesses need to work to protect themselves from the threat of lawsuits, and there are a few steps you can take to reduce the threat of a lawsuit that will negatively impact your business.
Get the right insurance. There are so many ways that a business can be severely and negatively impacted by a lawsuit. From millions in losses to long-term reputational damage, there are few areas of a business that a lawsuit does not touch. The first step for any business is to obtain a general liability insurance policy that will cover most claims around your business, such as the classic case of slip and fall or accusations of false advertising. However, for some businesses, that may not be enough, and specialized policies covering other potential areas of liability unique to their business types should be considered.
Make sure your business is structured the right way. Reducing personal liability is an important factor every business owner should think of when structuring a business. Incorporating in the right way, whether it be as an LLC, a corporation or other entity is vital. Work with an accountant to ensure that you create the right business structure.
Act deliberately toward both employees and customers. Nothing gets a business owner into trouble faster than misstating something or acting inappropriately. From promising too much, such as “the most efficient computer” when that’s not the case, to using outdated terminology to address consumers, there are many ways businesses can quickly go off the rails. Similarly, not providing for employees’ adequate care under federal and state law or acting in a discriminatory manner can quickly land you and your business in hot water. Ensure you have policies and procedures stated clearly in an employee handbook. In the handbook, lay out the processes and steps for handling difficult situations.
Have a legal team in place. One of the most effective strategies for quickly responding to the threat of an impending lawsuit (or one you’ve already been served with) is to have a legal team you can turn to. Call on this team as you build and grow your business to guide you on how to prevent matters from leading to legal trouble. Your team will know the ins and outs of your internal procedures in addition to the business structure you have established and can help you make the best decisions for your business.
No matter what your liability and coverage questions are, we are here to help. We can review the best options for you and determine the amount of general liability insurance coverage and other insurance coverage that you may need to ensure your business is protected and prepared. Call or email us today.