5 Ways to Prevent Your Small Business from Getting Sued

Getting sued can be a huge burden on your business. Take these steps to avoid it.

In our litigious society, any business can get sued—by a customer, an employee or another company. The number of ways of getting sued is mind boggling – ranging from discrimination and injuries to intellectual property infringement and contract disputes. A lawsuit is expensive, disruptive and can sink your business in legal fees.

“Many, if not most, lawsuits can be prevented,” notes business attorney Santiago A. Cueto, the founding member of Cueto Law Group of Miami, Fla.

Take the following steps to protect your business from a lawsuit.

1. Document Everything

Cueto notes that the most common business lawsuits he sees in his practice are contract and employment claims. The best way to avoid any misunderstanding is to put everything in writing.

Nothing is better at preventing lawsuits than a well-drafted contract, memorandum of understanding, memo to file or any other writing that records an agreement or important event, he says.

2. Create an Employee Handbook

To avert potential misunderstandings with employees, or former employees, draft a comprehensive employee handbook that contains all employment issues, including policies such as termination, maternity leave, sick leave, sexual harassment, vacation, etc. The handbook should be signed and dated by the business owner, the employee’s manager and the employee.

3. Understand Intellectual Property Laws

Take a look at your business name, logos and other designs to make sure that they do not violate any trademarks or other intellectual property laws. You can do a quick search of the U.S. Patent and Trademark Office website.

4. Maintain the Business Property

Prevent accidents from happening – and potential personal injury lawsuits—on your business property by maintaining every area where your employees or customers walk, and can potentially slip and fall. This includes parking lots, sidewalks, bathroom floors and hallways. Accidents, however, will happen, so the best way to mitigate loss to your company is by purchasing adequate liability insurance.

“Companies should have an insurance audit every three to four years to ensure their coverage is adequate,” says Howard A. Caplan, a business attorney with Lewis, Longman & Walker, P.A. of Jacksonville, Fla.

5. Communicate

Surprisingly, many disputes don’t necessarily have to turn into a lawsuit. “The best preventative measure to avoid a lawsuit is to simply pick up the telephone to clear up any misunderstanding,” says Cueto. There is nothing more powerful to disarm a potential litigant than a simple chat, he says. That simple step can end up saving you a lot of heartache, time and money.

However, if a formal lawsuit is filed against your company, contact your business attorney immediately.

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