As a business owner, you are responsible for every detail of your business. Making it a success is your ultimate goal and to do that you have to minimise anything that could disrupt the day-to-day operations and maintain business continuity.
One of the greatest disruptions to any business is getting sued. Whether you work with the public or business-to-business, litigation can throw up some serious problems and you have to make sure you’re adequately protected. The threat is real: over 100 million cases are filed in US state courts every year with contract disputes being one of the most common sources of liability for businesses, making up about 60% of the 20 million civil cases filed each year.
To make sure you aren’t the next to be sued it’s important that you understand some of the basic ways to protect yourself from litigation:
Be careful of what you say and do
Business owners, and their employees, should always be careful to avoid making any public announcements or conducting themselves in a way that may be considered questionable. This means avoiding things that are libellous such as potentially slanderous statements.
You should also be wary of becoming embroiled in a situation that could be considered a conflict of interest. This means a situation where a professional, or a corporation, has a vested interest which may make them an unreliable source. The interest could be money, status, knowledge or reputation for example. Look out for resources online on how to avoid conflicts of interest.
Have an attorney
Having access to a competent attorney that you’re comfortable with will be important in case you need this person to advise you before you act or on how to react in the event that you’ve been sued.
When looking for the right lawyer for you, consider one with familiarity with local laws and customs in the area in which your business operates. Having a lawyer who is knowledgeable in a particular area of expertise is also beneficial. For example if you were to be sued by the Internal Revenue Service then it makes sense to hire a tax attorney.
Insure your business
All businesses should obtain the appropriate type of insurance for them. If your business works directly with the public then public liability insurance should be the way to go. If you work mostly with other business then professional indemnity insurance is the must have kind of insurance for you. More than 50% of businesses that are paid by clients for their services fail to buy professional indemnity cover meaning
they’re not protected against legal fees or compensation claims if a client alleges they’ve made a mistake or given bad advice.
Protect your files
Cyber-attacks against businesses are growing at an alarming rate. Key files that are lost or stolen could then to lead to legal action from clients and suppliers so it’s important to know the risks. Over the past four years cyber-attacks on businesses have increased by 144% adding weight to the argument that businesses and other organisations should now be prepared for the possibility.
You are ultimately responsible for the protection of your company and your own personal assets in the event of a lawsuit. Understanding some of these basic principles should help you to achieve success free from the hassle of litigation.
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