Avoid a Lawsuit: 7 Tips to Protect Your Small Business from Getting Sued

Photo by ♔ Georgie R via Flickr
Photo by ♔ Georgie R via Flickr

Lawsuits are costly, inconvenient, and overall unpleasant. However, when you’re running a business--especially a successful one--you’d know that lawsuits are inevitable. From discrimination, injury, intellectual property infringement, to contract disputes, the possible charges are endless.

While there’s no solid guarantee your business won’t ever get sued, here are the ways to reduce the risk, protect your business, and stay out of the courtroom.

1. Document everything

This is quite basic, but is seldom done in everyday life. Documenting a well-drafted contract or memorandum that records an agreement is one of the best ways to avoid misunderstanding and prevent lawsuits. Emails, invoices, policies, contracts, should be kept safe to resolve future problems. Even telephone messages from clients, albeit how close you are, should be recorded to protect your business.

2. Understand intellectual property laws

As a business owner, it is your responsibility to make sure that your business name, logo, and other designs are not violating any intellectual property laws. Some business move forward, only to find out that someone else already owns the trademark to their business name. Before investing in time and resources, do your research. Visit the U.S. Patent and Trademark Office website to make sure that you’re registering your own trademark and not someone else’s.

3. Protect your files

Now that most businesses rely on computers, it is important to ensure safety for your computer system. Viruses can infect your business files, and put you at risk of not being able to perform a certain task. In addition, the infected files may be stolen or lost and can lead to legal action from clients. One way to protect your files is to always have a set of updated backed up files to refer to. Keep them offline to help keep them safe.

4. Create an employee handbook

To avoid misunderstandings with present and former employees, it is best to have an employee handbook that contains all important employment issues. These topics include termination, maternity leaves, sick leaves, compensation and benefits, sexual harassment, etc. The handbook should be given and oriented to the employee upon employment, and should be dated and signed by the business owner and employee. This handbook should also be updated consistently.

5. Think and act safe

Accidents do happen, but you can help prevent it by maintaining your physical business property. One way to avoid personal injury lawsuits is to keep safe the area where your employees work, where customers walk and can potentially slip. You can also consider securing alternative work sites in case of hurricanes and storms.

6. Hire a competent attorney

Aside from giving advice when your business gets sued, lawyers are needed during the entire business operation. They are there to oversee contract reviews, debt collection, and other legal matters, ensuring that your documents are valid and secure. That’s why hiring a good one is imperative. Fortunately, not all of them are as costly as many think. There are legal plan providers such as LegalShield that give small businesses access to qualified attorneys for a low monthly fee.

7. Communicate

One surprising way to avoid a lawsuit is to sit and chat. Try to clear the misunderstanding you have with your customer, employee, or other company who filed against you. Who knows, this simple step can lead you to the road with less heartache and inconvenience.

With these seven tips, your business will be on its way to a hassle-free tomorrow.

About the author A writer and entrepreneur, Melissa Page is based in San Diego, California. She writes just about anything that tickles her fancy and dreams to help and entertain readers with the her writing.