Playing Safe: How Your Small Business Can Prevent Lawsuits

Lawsuits can be a serious issue for a business of all sizes. According to a survey of some large companies in the United States, the average cost of a single case was almost $115 million. Although these costs can be considerable for even a large company, it’s nothing they can’t handle. It’s a different matter entirely for a small business.

A different study on the impacts of legal action against small business discovered that it cost them between $3,000 to $150,000. Unlike their larger counterparts, small businesses often have to cut their operational expenses or try to expand their revenue streams to recoup their costs.

The best way you can avoid getting sued and having to hire a reliable civil lawsuit attorney is to understand the most common types of lawsuits and employ a few practical strategies.

Common Lawsuits Against Businesses

Many businesses that get sued every year and some of the most prevalent types of litigation involve the following.

  • Breach of contract

It occurs when one signatory of a contract fails to live up or deliver to the specifications of the document. Breach of contract can manifest as many things. It can be your company failing to provide a product or finish a project within a specified time. Breach on contract can occur between your business and another company, your company and a customer, or you and an employee.

  • Employee discrimination

This type of litigation occurs when one of your employees sues your business for a perceived act of discrimination against them due to their age, gender identity, sex, religion, or disability. Employee discrimination suits can also be filed if a pregnant employee feels their status has been affected by their condition. You can also be sued for discrimination if the employee feels there’s something suspicious about their termination or if they aren’t paid overtime for some reason.

  • Customer discrimination

Most of the rules that govern employee discrimination also apply to your customers. If your business or a representative refuses to satisfy a customer’s wishes or cater to their needs because of their religion, race, age, sex, or gender identity, they could sue you and take the matter to court.

  • Harassment

One of the major issues around the workplace is when employees or customers are subjected to harassment. That can take the form of a system that actively makes the workday intolerable to employees. It can be sexual, such as unwanted advances, inappropriate comments, and romantic overtures.

Avoiding Litigation

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So how can you protect your small business form these sorts of lawsuits? You can do so by keeping the following guidelines in mind.

  • Monitor Your Actions and Words

Avoid getting sued for harassment or discrimination by following the guidelines set forth regarding these lawsuits. Ensure you and your employees are updated on what’s appropriate to say or do in the workplace. These seminars should inform them of what they’re not supposed to do in the workplace and other employees.

You should also create a system that makes it easier for victims of harassment or discrimination to report their experiences. That can provide them with an alternative method to find closure without resulting in litigation. Finally, ensure that you never engage in an acidity that can be construed as a conflict of interest.

  • Hire a Reliable Attorney

A lot of the time, you can settle a case before it even gets filed. But to do so, you need to hire a reliable attorney to represent your business. With a dedicated attorney at your side, you can take preventative measures to litigation. For example, you can have them regularly review your employee contracts, business dealings, and policies to make sure they have no glaring loopholes that can be the source of legal issues. Reliable legal representation can also be helpful when talking to people with grievances so that they can find a way to reach an accommodation.

  • Separate Assets

Before you even get into a legal situation, you should protect your personal assets by separating them from those of your business’s. You can achieve this in two ways. First, you could establish a trust to own the business instead of putting in under your personal properties. This trust is a legal entity that has its own tax return and owns the business, its cash, and assorted assets. When your business is sued, only the properties attached to your trust can be attacked.

You could also incorporate, wherein you form a corporation instead of owning the business directly. Although incorporation is very complicated and involves keeping track of new laws and filing more reports and taxes, it’s essential in preventing a lawsuit form cleaning out your personal properties.

Lawsuits are a part of running a small business, but you can ensure your company is the exception to this rule by using common sense and being vigilant.

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