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Potential lawsuits for small businesses

| Jan 4, 2018 | Blog

Building a startup takes intense research, preparation and fine-tuning. However, your work is not complete once your business is up and running successfully. Of course, there will always be continual improvements to make in all areas, but your real worry is litigation.

According to Insureon, over 35 percent of small businesses faced a litigation or insurance hazard in 2016. With more than a one-in-three chance of facing a legal claim, you need to know potential risks, how to prevent them and what to do when they happen.

Common causes of business lawsuits

Insureon reports that more than 22 percent of incidents were from client complaints and contract disputes. The next highest was employee injury at nearly 11 percent. These three areas cover most of the problems you will experience as a small business owner. Unhappy customers can lead to damage reputation. Contract disputes can be costly, and workers’ compensation claims are prevalent even in the safest of industries. Less likely to occur but still worthy of attention are injuries to customers on your premises or by your product.

How to prevent business lawsuits

While you cannot avoid litigation entirely, you can reduce the odds and build a strong defense against claims through the following:

  • Be completely compliant with industry standards, city laws and other safety regulations.
  • Have clear policies and procedures, and ensure all employees are familiar with and follow them.
  • Provide superior customer service.
  • Keep accurate records of transactions, claims and incidents.
  • Draft unambiguous, thorough contracts with the help of a qualified attorney.

Just as you needed legal help in establishing your company, so do you continue to need legal guidance to decrease risk of litigation.

What to do when you face a lawsuit

Just because your efforts did not prevent a lawsuit, you do not need to panic. If you have done everything right, the court may dismiss the case altogether. You can try settling the matter outside of court as well. The worst-case scenario is going to trial, but with the right attorney, you may win or at least reduce the damage.