Is your business prepared if faced with a lawsuit?
Business owners have a lot to worry about. On the top of your list is probably – maintaining cash flow, making sales, attracting and retaining customers, and handling employees.
Yet, studies show that 43% of small businesses are threatened with, or engaged in, a lawsuit each year. This means that most business owners will face the threat of a lawsuit at least once over the life of their business. A lawsuit will cost your business a lot of money, time and energy. The best thing you can do is to prepare your business so that it is in the best possible position when the threat of a lawsuit arises. There are steps you can take to help prevent and mitigate your potential damages.
Three reasons people typically bring a lawsuit against a business have to do with:
Employment. It is crucial to have contracts with every employee and independent contractor. These contracts must be specific to your business and your relationships. It is important to document this relationship in writing, even if your workers are family or friends. These contracts should contain provisions that limit the business’ liability and allocate risk accordingly. Another important item to have is an an employee handbook. This is where you will have clear written guidelines about workplace rules, behavior, and policies that comply with state and federal law. Business owners should have their employment practices reviewed and be advised on whether they are sufficient or not. According to a recent study, nearly one in five small businesses will face employee litigation.
Contracts. Attorney drafted contracts with everyone your business has a relationship with is necessary. This includes all investors, owners, clients/customers, and vendors. A well drafted contract can decrease the possibility of litigation, and also, the cost of it.
Intellectual Property. Once you pick a business name, logo, and slogan you should make sure that they are not already in use. After spending a lot of money on branding and marketing, the last thing you want is to receive a cease and desist letter for trademark infringement. A comprehensive search must be done to make sure not only your chosen name is not already in use but also to make sure it isn’t confusingly similar to a name that is being used.
It is imperative for business owners to be proactive and protect themselves and their company before a lawsuit is threatened. Most business owners do not know that there are several things that can be done to reduce the threat of lawsuits. Even if an unwarranted lawsuit is brought against your business, you will still be spending money and time defending it so it’s best to make sure your business has a solid legal foundation from the start.
The information listed above is not a comprehensive list of all items that need to be addressed. There are many other areas that can lead to liability so it is a good idea to have a consultation with a business attorney to make sure your business is starting off on the right track. It is important to contact a Florida licensed business attorney if you’d like to discuss legal compliance for your business. Wheeler Legal PLLC would love to assist your Brevard County business. Please contact us by calling (321) 209-5995 to find out how we can help you.
Disclaimer: The information contained above is provided for general informational purposes only, and does not constitute legal advice, nor is it intended to create an attorney-client relationship. This firm aims to provide quality information, but we make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained in or linked to this post. Nothing provided herein should be used as a substitute for the advice of competent counsel.