What to Do if Your Business Gets Sued: How To Protect Your Small Business

— December 15, 2018

What to Do if Your Business Gets Sued: How To Protect Your Small Business

Every business big or small is at risk of getting sued. You never know where it might come from, a vendor, a client, a disgruntled employee or an angry customer. Regardless of the reason, you need to be prepared so that if it happens to you, you will know how to resolve it as quickly as possible.

Familiarize Yourself with Business Laws in Your State

One of the best things you can do to protect yourself before or even after you have been sued is to get to know all the business laws in your state. The knowledge you gain will help you comply with regulations that if you do not follow, might get you into trouble. Be careful not to do business with unethical vendors, you don’t want your name sullied by the relationship and watch out for conflicts of interest.

The Internet provides a ton of great information. Spend a little time searching for court records in your state of relevant cases. That information will help you can prepare a better defense.

Hire a Competent Attorney

Getting sued can be confusing, scary and even infuriating. You need to hire a good “defense” attorney to plead your case for you. You might know your business inside and out, but leave the lawyering to the professionals.

If you don’t already have a good attorney for your business, interview at least three before making a decision. Ask questions about how they will approach the case, what their fee schedule looks like and if they have the time to devote to your situation. Be sure the attorney you choose is familiar not only with cases like yours but also local laws in your area. Every attorney specializes in a few practice areas. Ask what they are before you begin negotiating fees.

Hiring a lawyer can be challenging, you can find a good lawyer by checking reviews and directories online, asking colleagues or trusted friends or just cold calling and interviewing some that you like.

Tips for Protecting Your Business From Lawsuits

Your business is your livelihood, and your baby and the last thing you want to think about is it being jeopardized by a lawsuit. Thankfully, there are things you can do to protect yourself.

Be Careful of What You Say and Do in Business

America is a very litigious country with people happy to file a lawsuit over just about anything. The risk of a lawsuit puts legitimate businesses in the cross-hairs, and you cannot be too careful about what you say and do. Follow all rules, policies, and laws faithfully and always be respectful in dealing with employees, vendors, and clients.

Insure Your Company Against Lawsuits

Protect yourself and your company with sufficient liability coverage. Your insurance agent can help you select the policy that will protect you and cover damages in the event you are sued.

Separate Your Assets from the Company

One of the most important things is to keep your assets separate from the company. Be sure to form a corporation, so there is legal separation between you as an individual and your company as its own entity. This way if someone sues your company, they cannot come after you personally and seize your assets as well.

What to Do if Your Business Gets Sued: How To Protect Your Small Business

Put Everything in Writing & Communicate Clearly

Everyone is different and communicates in his or her own way. It is critical that you put everything from sales contracts, employee policies to vendor agreements in writing and spell out each and every detail. Do not be vague and leave nothing to chance. The more time you take now and detail you include, the less chance of any misunderstanding and a lawsuit later.

Follow Employee Laws Strictly

Many lawsuits come from a disgruntled employee who feels they were unlawfully fired or someone who believes they were harassed. Implement a robust training program to make sure all staff members are on the same page and know what is expected of them, what responsibilities they share and what the laws are regarding their conduct during work hours. Create a dedicated employee policy handbook and be sure to follow up with signed confirmations that each employee has read and understood it.

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Author: Emily Andrews

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