Articles » How to Avoid Civil Litigation Claims Against Your Business

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How to Avoid Civil Litigation Claims Against Your Business

 

 

Running a business can be exciting, challenging, and profitable. But, as a business owner, getting sued is never enjoyable. Dealing with a lawsuit against your business can be costly, time-consuming and even emotionally draining for everybody involved. And for many small businesses, the accusations associated with a pending lawsuit or civil litigation claim can cause serious damage to their reputation. Over the last twenty years, civil lawsuits against businesses have risen by a massive 400%. That’s why it’s so important for business owners to protect themselves from the devastating outcomes that result from an unfavorable decision in court. Here are some ways to protect your business and avoid lawsuits.

 

Incorporate Your Business

Even if you’re taking steps to avoid a lawsuit at all costs, not all situations can be prevented. For example, an employee could be injured on the job and your business could possibly be sued for and ordered to pay their medical expenses and lost wages. If you haven’t incorporated your business, the financial settlement could be collected against your home, bank accounts, and any other personal assets. Incorporating your business and separating yourself from it is a smart way to protect yourself from any liability related to your company.

Get the Right Insurance

While getting the right insurance coverage for your business will not prevent you from getting sued, it can further help to separate your business and personal finances from the financial consequences of a lawsuit. The right insurance policy can help you cover any legal fees and liability costs associated with a claim. Before you decide on the right type of insurance for you, it’s important to research the wide range of liability policies on offer. Most businesses opt for general liability insurance while others benefit from errors and omissions insurance which will protect against lawsuits filed by a client due to mistakes made during a project.

Draft Legal Contracts

All businesses should use the services of a professional such as a civil litigation lawyer to help them draft legal contracts when dealing with another person or company. This contract can protect your interests in the case of a claim or lawsuit; it’s important to define the services that you are offering to a customer in order to reduce your risk of legal disputes. Legal documentation clearly shows what was expected from each party from the start in a binding agreement.

Keep Accurate Records

Making it standard practice to keep accurate records at all times is something that any good business should do. The process should include recording the time and date of when an agreement was signed and any items discussed at meetings in relation to it. All communication can be documented, including emails, phone calls, and financial transactions. Businesses should keep clear records that outline exactly which services were agreed on with each customer in the case of a claim. Those details could include several different products or services that were discussed during the negotiation process. Clear and consistent records can be one of your best defenses in the case of a lawsuit

While lawsuits can happen to any business and it’s not always possible to avoid them completely, you can reduce your risk by striving to be ethical in all practices and build a strong reputation within your community.