Once Your Business Gets Sued, It’s Too Late to Fix the Problem
Wednesday, March 6, 2013 • 3:05pm
Many business owners do not budget for legal expenses, figuring that they can’t afford to spend scarce dollars on unnecessary expenses. Yet, somehow, when they get sued, they seem to find the money. Lawsuits are very expensive so I’m here to remind you that an ounce of prevention is worth a pound of cure. Do as much as you can to avoid a lawsuit.
How do you do that? Sit down and think of every reason for which a business gets sued. You should have come up with breach of contract with a supplier or a customer, disagreements with your partners, employee problems, products liability (if your business is selling a product), auto accidents if anyone drives as part of your business, failure to get paid, and regulatory issues.
Most potential problems are solved with well-drafted contracts. Sit down with your business attorney and have her/him review every contract in your office that he/she has not drafted or reviewed in the past. It is too late now to change any existing contract but you should be aware of all potential issues. If you don’t have a contract for a potential problem, have your attorney draft a contract and get it signed by the other party.
If there are any customer complaints that you are aware of, address the issues that the customers raise. They may go away or they may go to a lawyer and sue your business. Making disgruntled customers happy goes a long way to head off a lawsuit.
Are your premises safe for your customers and employees? Take a careful walk through your offices, warehouses, factories and make sure there are no safety concerns (dim lighting, badly stored chemicals, carpeting that can become a tripping hazard, slippery floors, etc.).
Know the employment laws and make sure all of your managers know them too. You do not want to get sued by an employee for sexual harassment, hostile work environment, or discrimination by yourself or by a manager,
If your business is regulated by any government agency, municipal, state or federal, make sure you know the rules. If someone has to be licensed, make sure he/she is licensed and complies with all licensing renewal requirements, including continuing education. If you need a permit from a government agency, make sure you get that permit.
Be proactive and spend a little money now. Although you can’t totally insulate yourself from all lawsuits, by consulting regularly with your business lawyer, you will save yourself a lot of money and aggravation by heading off most litigation. But, once you get sued, it’s too late to fix the problem.
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