7 Easy Ways To Avoid Business Lawsuits

By   /  
August 23, 2019

Finding yourself in the middle of an expensive lawsuit is every business owners worst nightmare, and it’s a lot more common than people realize. You can make a lot of money is you successfully sue a business so, unfortunately, there are a lot of people out there just waiting for you to slip up so they can make some cash out of you. It’s also beneficial for your competitors to sue you if they believe that you have breached copyright and your product is too similar to theirs, for example. Winning a case against a rival company can really give you the edge, so that’s something that you have to watch out for as well.






Photo From Pixabay CCO License

Lawsuits are bad news for you because they’re incredibly expensive, especially if you lose, and it also diverts attention away from the business. It’s difficult to push things forward and make your business grow if you are spending all of your time trying to fight a legal battle. It does a lot of damage to your public image as well and that can really hurt sales, so a lawsuit can do some serious harm to your business if you’re not careful. That’s why it’s important that you take these steps to avoid it.

Get The Right Insurance

 Before we look at the different ways to avoid lawsuits, it’s important to remember that you can never cover yourself completely. Regardless of how careful you are, there is always the chance that somebody will sue you and they might win, in which case, you need to be prepared for it when it happens. Without doubt, the most important thing is to get insurance which will cover your legal fees and the settlement if you have to pay one. Get in touch with a professional company like Morison Insurance Brokers and they will be able to advise you on the best insurance packages for your business. If you are involved in a lawsuit and you don’t have insurance to cover you, all of that money is coming out of the business and in some cases, it might be enough to cripple you completely. It’s not worth taking the risk, so make sure that you’re paying for the right insurance cover.

Incorporate Your Business 

Protecting your own financial assets is vital in business, which is why it’s a good idea to incorporate your business. When you incorporate a business, you separate the liability of the company from your personal finances. That’s incredibly important because if you don’t do that and you end up involved in a lawsuit and you can’t pay the settlement, it can be collected against your personal savings or even your house, and that will leave you in an incredibly difficult financial situation. But if you are incorporated, they will only be able to collect against the business assets, so even if you lose the business, you will still be in a fairly stable position afterward.

Don’t Ignore Health And Safety

Health and safety regulations can sometimes seem a bit excessive, but you should never ignore them unless you want to end up in a legal battle. Employees suing for compensation after being injured at work is one of the most common reasons that a lawsuit is taken out against a business and most of the time, it could have been avoided if they had followed health and safety procedures correctly. If you are following rules and regulations to the letter and you can prove that, then the employee doesn’t have a case against you because you have fulfilled your responsibility as an employer. That’s why you need to make it a priority to keep your employees safe at all times and make sure that you are up to speed on all of the health and safety regulations. The rules do change and you won’t be let off if you didn’t keep up to date with them, so make sure that you are always aware of any changes in the law, otherwise, you may get caught out.

Write Airtight Contracts

Contracts are one of the best tools you have when it comes to avoiding lawsuits, so make sure that you use them properly and you ensure that they are always airtight. Any time you make an agreement with a supplier or a customer, you need a contract. Even if it is somebody that you have a good relationship with, a handshake agreement doesn’t cut it because if they decide to break the terms of the agreement or they want to take legal action against you for some reason, you have zero protection. It’s their word against yours and that means you’re in for a lengthy and very expensive legal battle.

A good contract will show exactly what each party is agreeing to and outline how you will proceed if there are any disputes further down the line. One thing that can cause issues with contracts is confusion over the definition of terms. To avoid this, you need to sit down and go through the contract point by point and agree on exactly what each term refers to before you sign it.  As long as you are thorough with it, you should be able to avoid any legal issues.

Updating contracts properly is vital as well because if your agreement changes but you don’t update contracts to reflect that, you lose the legal protection that they give you. When you have multiple contracts that refer to one another, updating them accurately can get confusing, which is why it’s a good idea to invest in contract management software. This will give you easy access to all of the contracts that you currently have and it makes updating them very simple.

Keep Accurate Records

If a dispute over a contract does arise, you need to make sure that you have evidence to fall back on. As long as you can easily prove that you stuck to the terms agreed upon, the lawsuit shouldn’t drag on for too long and you will be able to win easily. That’s why it’s important that you keep good records. This is especially important in situations where there is not a contract in place, like being sued by a customer, for example. You need to keep an accurate record of all interactions that you have, like emails, phone calls, and transactions. These details can be used as evidence if somebody does decide to take a lawsuit against you. Often, you will be able to present this evidence to whoever is trying to take legal action against you and it might be enough to get them to drop the case before it goes any further. But if you don’t have all of those records, it’s going to be your word against theirs and if you can’t prove your innocence in the matter, there is a high chance that you will lose the case.

Conduct Business In An Ethical Way

A lot of lawsuits launched against businesses are simply an attempt to make money, but there are still plenty of them that are justified. When a business acts in an unethical way, they will be held to account for it, just like a person would if they broke the law. The easiest way to avoid getting arrested is to avoid committing a crime, and the same is true in business. If you don’t want to get sued for unethical practices, conduct business in an ethical way. If you are deliberately doing things that you know are unethical, you cannot be surprised when somebody decides to take legal action against you, so always make sure that you are operating within the law and don’t try to push the boundaries. A lot of businesses do unethical things because it makes them money in the short term, but it usually comes back to bite them and they end up worse off in the long term because they end up in a lot of legal trouble.

Unethical business practices are also terrible for your public image, so if you are involved in a lawsuit because you have been acting in a dishonest way, it’s likely to hurt your sales a lot.

Offer Good Customer Service

A customer that has some kind of grievance is not likely to threaten legal action right away, it will be a last resort. If a customer comes to you with an issue and you do your best to come to a resolution that works for both of you, it’s not likely that they’re going to take legal action against you. They will only consider bringing a lawsuit against you if they feel that they are being treated unfairly and you are not listening to their concerns. If your customer service staff are belligerent and rude, that doesn’t do you any favors either because if upset customers, they’re far more likely to take it further. That’s why you need to make sure that you have good customer service processes in place and you employ well trained customer service staff.

You can never guarantee that you won’t find yourself in the middle of a lawsuit but if you follow these tips, you should be able to avoid any serious legal trouble.