Business facing lawsuit, in all its forms, can have a negative effect on the business and its bottom line. Contract disputes and accusations of fraud can force a company to put business on hold. If you do go to trial, costs can jump considerably as trial is typically the most time-consuming part of a case. Publicized disputes can even tarnish a business’s reputation.
If you’re sued, the first thing you need to do is contact a business attorney. It’s normal to feel overwhelmed, upset, and disturbed; Nevertheless, if you want to keep your business and its reputation intact during this time, it’s important to stay calm.
Lawsuits can be filed by employees, clients, vendors or even another business; but no matter who filed it, or if you win or lose. A lawsuit against your company can cost you a lot of money, damaged reputation and emotionally draining as well.
However, if you’re not facing a lawsuit yet, it’s time to prepare for one to meet the eventuality!
Incorporate Your Business
One of the most obvious suggestions to all business owners is to avoid a lawsuit at all costs. However, not all situations can be prevented. For example, if you owe a debt or pending bill to a contractor; you could possibly be sued for and ordered to pay the due. If the contractor wins the lawsuit, a financial settlement can be collected against your home, bank accounts, and other assets.
It is smart to incorporate your business and separate yourself from liability related to your business. This forces the opposing side to sue for only the assets associated with your company in any potential lawsuit.
Maintain & Keep Accurate Records
Reputable businesses make it a standard practice to keep accurate records at all times. This process includes recording the time and date of when an agreement was signed, and items discussed at each subsequent meeting. Any communication, including phone calls, emails, and transactions, can be documented.
Read More : 7 Benefits of Record Keeping for Business
Businesses should have their records state exactly what services were agreed upon with each customer in case of a lawsuit. Those details could include a number of different products or services that were discussed in the negotiating process. Remember, consistent records can be used as a defense in the case of a lawsuit.
Use Legal Contracts
Businesses of all sizes should use legal contracts drafted by an attorney when dealing with another person or company. This rule pertains to all businesses because a contract can protect your interests in case of a lawsuit. It is important to define the services you’re offering to a customer in order to reduce the likelihood of legal disputes. Legal documentation will show what was expected from each party in a binding agreement.
Get Insurance to Protect Against Lawsuits
Insuring your business can support you in the financial strains associated with a lawsuit. Your insurance company can help you cover legal fees and liability costs. It is important to research the wide range of liability policies offered before making a final decision. Check with an insurance broker about which liability policy works best for your business.
Provide Great Customer Service
One way to avoid being sued is having great customer service. Some customers may just be upset, and quality customer service can make the difference between calming them down or dealing with a lawsuit. Your staff should be prepared to explain that mistakes are unintentional, but can happen. Proper training with managers and employees can help prevent a lawsuit.
Learn More : 5 Simple Approaches for Good Customer Relationships
Implement Company Policies and Procedures
Another important step in protecting your business is properly drafting workplace policies and procedures which may help prevent lawsuits. Instruct your staff to follow these policies because they can be vital in protecting your company. Providing a job manual or employee handbook is the safest route for your employees to learn policies and perform their jobs well.
Build Reputation for Business Ethics
It is important that businesses strive to be ethical in their practices every day in order to build a reputation within the community. The goal should be that no client, transaction, or a dollar amount is worth jeopardizing your place in the market by bending the rules. Act in a professional manner each time you deal with customers and employees. Following all these will help prevent being sued in a lawsuit.
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