How Can a Small or Mid-Size Business Avoid Lawsuits?

Most of the time, the last thing a business owner wants is to end up in court. Lawsuits can be very expensive, and they can take multiple years before they are fully resolved. Since the onset of the COVID-19 pandemic, lawsuits have been an even greater concern due to courts being closed or operating at a limited capacity. Even seemingly simple cases may now drag out for an extended period of time, causing more difficulty and expense for businesses. While there are some situations where business litigation may be unavoidable, business owners can take steps to minimize the risk of lawsuits and avoid unnecessary legal complications.

Tips for Avoiding Business Lawsuits

Business owners can take a proactive approach to protect against lawsuits by regularly reviewing their procedures, identifying potential legal issues, and taking steps to resolve any problems they discover. Some issues to address may include:

• Business structure – Owners and partners can protect themselves from liability by ensuring that there is a separation between their business and their personal assets. Selecting the right business entity and establishing a proper legal structure for a business will ensure that an owner will not be personally liable for business debts, including judgments in potential lawsuits.
• Contracts – Regular review of a business’s contracts can identify any potential concerns, including situations where a business may be unable to fully meet its contractual obligations or where either party may have violated of a contract’s terms. Addressing and resolving these issues before they become a problem can help avoid litigation related to a breach of contract. 
• Employment policies – To avoid claims that a business has violated the laws or committed discrimination when hiring, promoting, compensating, or terminating employees, a company should make sure it has the proper policies in place and is in compliance with all applicable labor laws. This can prevent claims of discrimination based on race, sex, age, or disability, and it will ensure that a business is prepared to respond to complaints related to sexual harassment or other issues involving employees.
• Conflicts of interest – A business can protect itself by avoiding associations with other people or companies who have a reputation for illegal activity, poor treatment of customers or employees, or other objectionable practices. Other actions by a business owner or high-level employees could create the potential for conflicts of interest, such as serving in a local government position and creating policies that would benefit the business.
• Records – It is important for a business to maintain the necessary financial records and other documentation related to its employees, legal agreements, and policies. Keeping multiple backup copies of these records will ensure that they can be located if they become relevant during a legal case.

Contact Our DuPage County Business Law Attorney

One of the best ways you can protect your company from litigation is to work with an outsourced general counsel. Through our YourOGC program, the Gierach Law Firm will work closely with your business to identify any legal concerns and ensure that they are addressed correctly. We will help you take the proper steps to minimize your risks and avoid the possibility of legal action that could take years to resolve. To make sure your business has the legal advocate it needs, contact our Naperville general counsel lawyer and set up a consultation by calling 630-756-1160.

Sources:

Investopedia

CEO Today