How to Protect Your Small Business When You Are Getting Sued

Ask any business owners the risks they face, and they will talk about competitors, regulation, taxes, and rising costs.  However, one risk many business owners tend to overlook is getting sued.

How can this happen when we live in such an extremely litigious society?  The answer is that most business owners don’t think it will happen them.  After all, lawsuits are something big companies need to prepare for – not a small business.

There is just one thing wrong with this line of thinking, a lawsuit, or any other form of legal action, will probably happen to you.  As such you need to be prepared and this article will go over some of the ways to protect your small business when you are getting sued.

Why You Should be Worried

When you stop to think about it a civil action, or even a criminal action, against your business comes down to one thing – money.  That’s right, either you spend a fortune defending yourself or you lose a fortune paying the judgment or fine.

As such, just hoping that you never end up in legal jeopardy isn’t good enough.  Sure, you are probably planning on breaking the law anytime soon, but you need to have a plan of action in place just in case you run into trouble.

According to Tim Flaherty from the Flaherty Defense Firm in Fort Walton Beach, Florida, ‘for most people, hiring an attorney is not something they’ve ever done before’.  This can create can prove problematic when the time comes to retain counsel.

As such, you might want to have the name of a good lawyer on call just in case you run into trouble.  While this attorney might not be able to help in every situation, they will know who to refer.

Now, the question which comes up is whether you need to keep the attorney on retainer?  For most small businesses, the answer is no.  However, you do want to develop a relationship with an attorney in your area as they can also provide support when you need to review contracts and other documents as well.

Back to why you should be worried.  The simple reason is that anything can happen in business and as such you need to be prepared.  If you don’t have a plan for what to do when you get sued, then you are leaving yourself open to losing money – if that doesn’t keep you up at night, then nothing will.

Why You Will Get Sued

Let’s face it, you’re not really in business until you get sued.  This is not to say that you are trying to cheat your customers – quite to the contrary.  Instead, accidents, contract disputes, payment issues, or product liability issues happen, and this probably means that you will get sued someday.

In fact, one common source of small business lawsuits are employees.  This is not to say that you should never hire anyone, rather it is to highlight the potential risk tied to the perception of unfairly terminating someone or if someone gets injured while they are on the job.

Next to your employees, your customers might sue you – especially if they don’t feel your product or service is up to snuff.  Even companies with a customer-friendly approach to doing business can get sued and examples include lawsuits against Starbucks among others.

What Can You Do?

Let’s start by looking at ways to reduce your risk exposure.  These include taking steps to minimize the financial risk to you and your family, such as setting up separate companies for the different locations your company has or getting an insurance policy to cover costs when you are sued.  Examples of insurance policies include general liability coverage as well as specialized policies depending on your line of business.

In addition, you want to be careful what you say and do.  Remember, everyone has a television studio in their pockets these days and the last thing you want is for you or your business to go viral for doing something untoward.  The same goes for handling negative reviews or how you market your business.

In addition to reducing your risk and watching what you say, you also want to make sure that you have legal help available at a moment’s notice.  If you have insurance, then your insurer might recommend a local attorney to handle your case – if not, then you will want hire a lawyer.

Lastly, you want to make sure that you keep good records.  So many small businesses fail to defend themselves due to spotty record keeping.  As such, you want to make sure you have a defined process for handling employee relations as well as customer complaints – doing so will help you a lawyer and save you money in the long run.

Taking the right steps can not only help to keep you from getting sued it can also save you time and money when you do.  While this doesn’t mean that you will need to get sued, it will help to ensure you and your family are protected when it does happen.

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