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Preparing Your Small Business for A Lawsuit

Preparing Your Small Business for A Lawsuit
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You can try to protect your business from liability, but there are no guarantees. All it takes is one negligent action by an employee or an injured customer looking to recoup their costs, and your small business could face a costly and tricky lawsuit. It’s important to be prepared.

A lawsuit filed against you can have many consequences. Not every business can handle such a serious financial loss and, even if you successfully defend yourself, the operational costs can be significant. A lawsuit can also seriously damage a business’ reputation, especially if the battle is highly publicized. There are a few ways you can protect yourself before a lawsuit happens. 

Find an Attorney

You shouldn’t wait for the event of a lawsuit to find an attorney, as consistent legal advice can help almost any business. When you set up your business, you’ll deal with many local, state, and federal regulations. Having an attorney on retainer can help avoid costly pitfalls down the line and, if necessary, forestall potential legal conflicts with a single well-worded letter. 

When a potential lawsuit is brewing, contact your attorney immediately for advice. To find the right attorney, search for one with experience both in business law and private lawsuits to ensure they can cover all your legal needs. Make sure to look at their history and any public reviews of their service before contacting them. 

Find Insurance

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Being insured is the best way to protect your business’s financial health because an insurance policy will often cover costs and losses resulting from a lawsuit under any circumstances. Workers’ compensation insurance, legally required in most states, will cover employee costs from injuries. There’s one type of insurance, especially helpful in case of lawsuits, you should consider. Do you need errors and omissions insurance? 

This insurance protects businesses from costs resulting from mistakes or errors in the services they provide. This is also known as professional liability insurance and covers negligence or violations of good faith. While no business wants to think of having these liabilities, it’s an important protection for your financial security. 

Gather Information

If a lawsuit happens, the best thing to do is secure all the evidence you need to defend your business. Odds are your opponent will be looking to do the same. First, look into the information that is already out there. Installing security cameras in your store or office can add safety and security, as well as prove a vital resource if you’re falsely accused of negligence or misconduct in a lawsuit.

In the absence of hard exculpatory evidence, you’ll want to look for witnesses. If an incident happened in a crowded store, the odds are high that someone there can back up your story. Having a record of your customers can make it easier to track them down. Ensure all your evidence is ruled admissible by the judge to keep abreast of all deadlines and requirements for the discovery process. This may be helpful if you’re looking to settle out of court.

Make Adjustments

Defending your business in court and the discovery process should be your priority, but minimizing your risk in the future is also critical. Take a look at why your business is being sued. Whether it’s a legitimate lawsuit or not, you can take steps to protect yourself from liability and improve your business’s financial stability and reputation. 

Look for any errors in your services or products that led to the lawsuit. This can include training your employees better or sorting out any major safety issues or maintenance concerns that could lead to customer injuries. Your staff should also be trained to handle customer complaints and incidents before they can escalate. 

If you don’t have any onsite security and surveillance, it may be time. Having a few cameras around the store or office is a helpful anti-theft tool and can capture valuable footage that might be useful in proving your case in court if you’re sued again. 

Protect Yourself Before a Lawsuit

You may not be able to prevent every lawsuit, no matter how many precautions you take. Sometimes a disgruntled or inconvenienced customer wants a fight in court. With these simple steps, you can ensure the best chance of success in court or at the settlement table and give yourself the upper hand in legal affairs.

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