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While individuals rarely have to face the threat of a lawsuit, businesses are usually more exposed and business owners are often forced to deal with legal issues when they least expect. When you own a business, a lawsuit, or at least a lawsuit threat, is often inevitable. This does not necessarily mean you or your company did something wrong, as lawsuits can surface from the most common issues, such as accidental injuries or unhappy customers. With lawsuits against entrepreneurs and businesses being so frequent, you need to make sure you know how to protect your business from the very moment you open your company’s gates.
Get Familiar with the Common Lawsuit Causes
Not knowing the law will not exempt you from it and a lawsuit can arise when you least expect it. You can’t protect yourself from something you don’t know, so familiarize yourself with the most common causes for business lawsuits. While every lawsuit is different in its own way, there are some general types of lawsuits that you can read about, to get some advice on how to prevent them:
Employee lawsuits
Usually, the most common reasons for business lawsuits are coming from your employees. There can be multiple reasons for employees to sue the company they are working for, from discrimination to harassment and workplace injury.
Discrimination lawsuits are usually filled by employees, when a decision of the employer or supervisor seems to be based more on the employee’s race, sex, religion, gender association or nationality, rather than their work competence. To protect yourself from discrimination lawsuits, make sure you don’t leave room for any kind of interpretation, especially when making decisions regarding promotions or dismissals.
Harassment lawsuits typically occur due to bullying, sexual innuendos or active hostility towards an employee. Most harassment lawsuits come from female employees who feel they are being drawn into sexually charged discussions by other co-workers and are not being supported when they address the issue to a superior. To prevent these types of lawsuits, listen to your employees’ complaints and investigate the situation. If the claims turn out to be true, act accordingly and apply appropriate punishments.
Injury lawsuits are often happening due to negligence, when the employer knows about a dangerous situation, but does not do anything to prevent a potential accident. When asked about the main reason employees file injury lawsuits, experts say that more and more personal injury solicitors apply a conditional fee arrangement. This means the solicitors will only charge their clients a fee if they win the case. This way, employees feel they have nothing to lose and due to workplace negligence, they can win the case. To avoid an injury lawsuit, make sure you inspect the equipment regularly, follow legal guidelines and offer employees the necessary training to operate specific equipment.
Consumer lawsuits
Especially when conducting a B2C business, consumer lawsuits can come when you least expect. Selling defective products that can harm the customers or not respecting a contract can lead to the customer taking legal action against your business. These accusations can happen, whether the issue is real or not, as some customer would do this hoping you would agree to pay a settlement to avoid going to court. If such thing happens, talk to your attorney to investigate the situation and do not settle if you know for sure you did not violate any of your customers’ rights. Show interest in your customers’ complaints and treat them with respect by providing good customer service and offering to compensate in case their complaint turns out to be valid.
Hire a Good Attorney
Experts say that every business should need two professionals: a good accountant and a good lawyer. Hiring a good lawyer will benefit your business not only in case of a lawsuit, but with other legal aspects too, such as trademark or copyright. If you are thinking about hiring an attorney after you have been sued, it might be a bit too late. You get left with little to no time to find a good lawyer and you might be tempted to hire the first one that crosses your path. Not to mention the big fees an attorney will charge to get your business out of trouble, which is significantly bigger than a normal fee an attorney would ask for to keep an eye on your business.
When choosing an attorney, deciding if you need to turn to a small firm or a bigger one can be difficult. While small firms or solo practitioners do charge less, they might not possess all the skills you need to protect your business. A bigger firm can offer you all this, as they usually have specialized lawyers for all sorts of issues, but will typically have higher fees. Turning to a generalist can be helpful when you have to deal with a simple issue, but if you want to benefit from all the advantages a lawyer can offer, a big firm might be better for you. Think about it from the plaintiff’s point of view. If they were to sue you, receiving a letter from a powerful law firm might cut their impulse.
Insure Your Business
Business insurance is here to protect your company against financial loss that may result from lawsuits or actual physical damage that your business may face. You might think you are prepared for any kind of issues, but protecting you from the unexpected is exactly why business insurance was designed. While there are many types of insurance that your company might need, the most common ones are property, liability and workers compensation.
A property insurance will pay for damages your business property might be facing. This does not only cover the actual business place, but also furniture and essential equipment inside. Some insurance policies also cover expenses needed for your business to keep operating until the damage from a covered loss is repaired. Liability insurance comes in handy in situations such as customers being harmed by a faulty product or service and suing you to cover their damage. This type of insurance also covers medical fees for those who are harmed.