If you own a small business, chances are that you (or your business) will be sued at some point. In fact, the longer your business is open, the more likely it is that you will be involved in litigation of some type.
It could be a slip and fall claim filed by someone who tripped while walking into your store. It could be a discrimination suit filed by a disgruntled former employee. It could be a contract dispute filed by a supplier who feels duped.
Although some businesses are much more prone to lawsuits than others (think: a ziplining business versus an Etsy shop), all business owners expose themselves to potential lawsuits each time they enter an agreement or hire an employee.
Even being successful enough to have competitors can lead to lawsuits, whether they are legitimate or not. Unfortunately, even "frivolous" lawsuits can be very expensive and can destroy everything a business owner has worked for.
Steps to protecting your business -- and yourself
There are certain steps a business owner can take to mitigate the damage that could result from a lawsuit -- or help prevent a lawsuit in the first place -- including:
Use the right business structure to protect your personal assets. If you haven't already, it's a good idea to form a limited liability company (LLC) or incorporate your business so that you are not personally responsible for the business' liabilities, including lawsuit damage awards. Forming an LLC is a lot easier than most people realize.
Make sure your insurance coverage is up to date. As a law firm that represents businesses dealing with lawsuits, we often hear from business owners who are sued during a lapse in their insurance coverage, which can be extremely frustrating for them. The easiest way to avoid this is by making sure your insurance coverage stays up to date.
Work with a lawyer to avoid exposing yourself to liability. You have heard the saying "an ounce of prevention is worth a pound of cure," right? Lawyers are really good at spotting potential issues that could expose your business to lawsuits in the future. Hiring a lawyer to keep you out of trouble is usually a lot less expensive than hiring a lawyer to get you out of trouble.
If you do end up getting served with a lawsuit, contact an experienced attorney in your area who can help you deal with the situation as efficiently and cost-effectively as possible.