Five Things You Can Do to Prevent Your Business from Being Sued

Lawsuits and other legal issues can be some of the most expensive costs for your company. Attorney fees can add up quickly, and any monetary damages that must be paid to a client, prior employee, vendor, or another injured party can be very substantial as well.

The best way to reduce such costs is to avoid getting sued in the first place. Unfortunately, that is often easier said than done. You can take certain steps, however, to cut down your exposure to lawsuits. Below are just a few suggestions.

  1.  Create standard policies and procedures.

You may be surprised how much having regular policies can help your business. For example, if your company possesses sensitive client information, be sure that you have a system in place to protect that information and that all of your staff follow the proper protocols.

Implementing standard protocols also helps you have some control over how a problem will be handled when it arises. For instance, if a customer complains about an issue, you should have established procedures that your staff can use to record that a complaint was made and to address it.

  1.  Keep accurate records.

We have so many clients come in with legal problems, but they do not have the paperwork to show what happened. You should keep records for every written contract for at least four years from the last date of performance under the agreement. (This is the statute of limitations period for written contracts.) The time period is shorter for oral contracts, but you should have a written record for every deal as part of your recordkeeping too.

  1.  Separate yourself from your business.

Many small business owners make the mistake of not maintaining a meaningful distinction between themselves and their company. You may want to consider incorporating your company, opening a separate bank account, and creating a business name. Confusing you and your business can create problems when you sign contracts, order supplies, and more. It also can put your personal assets at risk should you become liable for obligations that really belong to your business.

  1.  Be sure to use good employment practices.

Even something as simple as having an employee handbook can significantly help your company avoid lawsuits that might be triggered by your employees. You should always keep in mind that your employees are just that—employees. Small business owners sometimes struggle with the line between friend and employee, and that can lead to legal issues in some situations.

  1.  Get regular legal audits.

You may not realize just how exposed your business is to liability until you pose the right questions to the right people. A legal audit involves an attorney coming into your business to evaluate your practices, books, records, and more. The lawyer can tell you where you have legal risks or potential problems long before they cause any real harm.

Integrated General Counsel can provide this type of service, and we will help you take steps to fix whatever your issues may be. Contact us to learn more about how we can help.

Written by Integrated General Counsel

Our focus includes handling a variety of corporate matters and also includes litigation in state and federal courts. Our current practice includes providing transactional services and representing a variety of small and medium-sized companies as their outsourced general counsel.