One danger that many businesses forget to think about is how they can be sued for liability. This usually comes in the form of customers or even employees filing a lawsuit against your company because it failed in its responsibilities. For example, product liability lawsuits stem from the fact that a customer thinks that your product was not as safe as it could be. You can also be held liable if your employee thinks you did not provide a safe work environment and they got into an accident.
Lawsuits like these can wreck businesses. They can easily result in damages that you need to pay for, which eat into company funds. They might also result in punitive restrictions. To avoid them, you’ll have to take steps to reduce liability risks in your company.
Work With An Attorney
The essential first step to anything involving lawsuits and legality is to have an attorney work with your company. There are various legal liabilities that might involve you. For example, a mistake in a contract can have you liable for an employee’s wrongdoing. It would be best if you had a lawyer looking over all your company’s operations and contracts so that you are in no legal danger. Additionally, when you have a lawyer working for you, you can have a legal defense ready to go at any time.
The best option for your company is to have a lawyer on retainer. This is if you need constant legal work but can’t afford a full-time attorney. You pay a retaining fee as a down payment for all legal consultations, with additional fees coming up when you ask for more from your lawyer. This ensures that you don’t have to scramble for a lawyer every time that you need one.
Change Your Business Structure
Another way to improve protections against liability is to use the right business structure. Most small businesses are single proprietorship operations. But this means that your personal and business assets mix. If you or your business gets sued, both of you will be in danger of bankruptcy.
A smarter approach would be to use alternative business structures that are available. For example, if you set up your company to be a limited liability company. An LLC protects you from the liabilities of the company’s operations which shelters you from any lawsuits. You can also choose to create a corporation, which is better for larger operations.
Get Insurance
It would be best if you also got some insurance. There are several types of liability insurance available that can cover all the potential lawsuits against you. First, there is general liability insurance. This protects you from accidents and claims of negligence. Next, there is product liability insurance. This is in case the product or service you are offering cause some pain or injury to someone because of its defects. Finally, there is professional liability insurance. This is only applicable to some professions like doctors because they might be liable for how they treat their patients.
These insurance plans can be expensive, but they are worth it if you get sued. They can help defray the costs of lawsuit defense and even help with the settlements if you lose or decide to settle.
Improve Safety and Security
The best way to avoid getting sued is to implement various risk-lowering improvements in your company. A good example would be implementing a better safety program in your workplace. This reduces the chance of accidents. Safer work environments mean fewer accidents and the chance that an employee sues for general liability. It can also help in your legal defense to show that you did everything in your power to prevent any accidents. This can result in the court deciding that you are not liable.
This is the same idea behind stronger robust cybersecurity. With proper network security management and other improvements, you can ensure no data breaches happen on your watch. Several lawsuits have been filed against companies who were lax about their data security, and you don’t want to end up like them.
Besides these improvements, you should also do your best to comply with any industry standards. Any failure to meet them can have people accusing you of negligence. This can easily turn into a liability lawsuit if any customer was injured in some way.
You can’t eliminate liability risks. There is always a chance that something goes wrong. The best you can do is minimize the chances of a lawsuit and to reduce the financial damage when it happens. Start preparing now, and you can be sure that your company will be able to weather any liability lawsuit that comes your way.
