Unfortunately, there is no way to guarantee that your business won’t end up getting sued somewhere down the line. There are always things that can go wrong, no matter how careful you are.
The good news is that there are plenty of things you can do to reduce the risks that you will end up on the wrong side of a civil lawsuit. Litigation proofing your company is essential, because it only takes one lawsuit to bankrupt a small business and ruin your reputation forever.
Shutterstock Licensed Image – By Alexander Supertramp
Here are some simple steps you need to take to protect your business from a possible lawsuit.
Incorporate Your Company
It’s always a good idea to incorporate your company to limit your liability. Corporations are legally separate from their shareholders, which means that should your company be sued, the complainant can only take money from your business and your shareholders’ investments, not your/their personal assets. This won’t exactly protect your company from litigation, but it will ensure that the damage is limited in the event that the worst possible scenario does happen.
Ensure Your Client Contracts, Disclaimers and Waivers are Clear and Tight
Once you’ve sorted out your company’s incorporation, you’re going to want to take a look at the documents you produce. Why? Because by far, the majority of disputes that end in litigation are caused by simple misunderstandings of the deals you’ve made and what is expected to be delivered by each party.
The risks of a legal dispute will be much lower if your contracts, disclaimers and waivers are all very clearly written. They should include:
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- Your obligations to the client
- Limits of the guarantees you make
- Liability waivers for damages that are not caused by gross negligence or misconduct on your part
- The risks clients are taking
- When payment is to be expected
That’s why you might want to consider hiring a professional contract writer to produce all of your important content. Yes, it’s an extra expense, but it can save you a bundle in the long-term by keeping the lawyers at bay.
Do the Same for Employee Contracts
It isn’t the Victorian Age – employees have rights now. You need to ensure that they get those rights if you don’t want to be sued. Not only does your company have to adhere to any rules set out by the government about working conditions and minimum wages in your jurisdiction, but you also need to ensure that you draw up tight contracts, much like you do for your clients, which lay out exactly what your obligations are to your employees and they you. If it’s written down and signed, then they won’t have a valid case if you follow the terms of the contract.
Health and safety Should Be a Priority
In many industries, particularly those that work with heavy machinery or other potentially dangerous equipment/situations, employees file most lawsuits, due to illness or injury. Your business needs to mitigate those risks.
First and foremost, you should conduct risk assessments of every single aspect of your business and put measures in place to protect against them. From calling in the Fall Protection Pros to help you keep staff safe as they work in tricky situations to ensuring you always have a trained first aider on your team, there are numerous things you can do to prevent personal injury claims against you before they start.
Deal with Disputes Fast
If a dispute does arise, even if you know that you are not legally at fault, it is often worth thinking about settling the matter fast. Why? Because although you might have to pay a little compensation, your company’s name won’t get dragged through the courts, earning a poor reputation and racking up expensive legal bills. Of course, it totally depends on the situation, but sometimes it’s best to resolve things early. One reason is that one lawsuit can trigger a few more chancers looking to jump on the bandwagon.
The bottom line
As I said above, there is no way to be 100% sure that a lawsuit will never be filed against your company. Fortunately, if you get your ducks in a row and do everything right, then you are much less likely to be subpoenaed as the defendant in a civil suit.
