Five ways to protect your business from lawsuits

Football_Helmet_With_PRO_GuardThere are more than five ways, but here are some suggestions that may help business owners, from a law firm with experience on both sides of the court room.

1. Talk to an attorney about your operations before you get sued.  Many companies are tempted to put off seeking an attorney’s advice until the process server arrives with a copy of a lawsuit.  In fact, long before any lawsuit is filed, a lawyer can review your business operations with you and identify ways to make your business a “smaller target” for a lawsuit.  The saying that an ounce of prevention is worth a pound of cure holds true in law practice.  Generally, the earlier you get a lawyer involved, the less you spend on that lawyer, because it takes less time and legal fees to do something right the first time than to fix a mistake.

2. Learn the law that governs your industry, your labor-management relations, your taxes, etc.  We understand that you have a limited amount of time, but this is another area where a lawyer can help you by training your managers and employees on specific issues.  The time to find out that your hard-working secretary is legally entitled to be paid for overtime hours on an hourly basis is before she or he begins employment.  The alternative is to find out after the lawsuit is filed, when the solution is more time-consuming and more expensive.  Some managers assume that they can do whatever other companies in their industry are doing, but this doesn’t always work.  A violation of the law can be common, and can even be an industry-wide practice.  “Everybody does it” is not a defense.  Learning the rules that apply to your business can help you avoid accidental violations of the law, which, unfortunately, are quite common.

3. Keep complete and accurate records.  This might seem obvious, but it is surprising how many companies conduct major transactions without any documentation.  Some business owners may subscribe to the view that “a handshake is better” but it is not.  Even assuming that everyone involved is honest, no one’s memory is perfect, and in law the details matter.  Some managers may think that they are safer from lawsuits without a “paper trail” but in our experience the client with no records eventually regrets not having them.

4. Make sure you are getting your legal advice from an attorney who is familiar with the law governing the type of problem you have.  The field of law contains many specialties that differ greatly from each other.  The personal injury lawyer who skillfully handled your last traffic accident case may know less about taxes than you do.  The family attorney who handled your great grandmother’s probate case with such tact and wisdom may only know employment law from a thirty-minute Google search.  If your lawyer is new to the type of problem you have, verify that she or he will commit the time it takes to learn the full legal background of your case.  All law is written down somewhere.  Your lawyer should be able to identify specific prior case opinions, regulations, statutes, or contracts to back up his advice.  Bad advice from an attorney is not a defense when you get sued, so that opinion letter from a lawyer had better be a good one.

5. Be nice.  Finally, you will hear a lot about frivolous lawsuits, but lawsuits do not usually strike randomly like tornadoes or hurricanes.  Lies, broken promises, bullying tactics, cheating, unfair or unequal treatment, and general bad manners by a company’s employees or managers will all greatly increase the risk that the company will be sued.  We recognize that some of you may worry about being innocent victims of a lawsuit that you did not deserve.  However, your company’s overall risk of being sued is lower when the company’s employees don’t irritate or offend your stock holders, customers, other employees, or vendors, which they may do without even realizing it.  Being polite makes people feel that they can work things out with you instead of suing.  When you hang up on someone, his next phone call may be to a lawyer.



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