Small businesses usually have legal counsel on deck, to protect themselves in the event of a lawsuit, but it’s far better to avoid getting sued in the first place.
It’s unfortunate that entrepreneurs who go to great lengths to take care of their employees, as well as their customers, sometimes find themselves caught up in lawsuits unnecessarily because someone found a crack in their armor..
Even though you have every intention of running a clean, productive business, you still have to protect yourself so that no one can take legal advantage of an unforeseen mistake or oversight.
1. Avoid harassment & discrimination like The Plague.
So here’s the thing with workplace harassment: It is most often perpetrated by supervisors and managers, towards employees of whom they are in charge (though it goes in the other direction, as well); and those supervisors usually don’t realize that what they’re doing is harassment until a complaint is filed.
Large corporations have protocol in place for this, but many small businesses don’t have any established channels for complaints of harassment. That’s something your business should definitely have, to make sure those complaints are dealt with before they progress.
Posting a laminated sign on the wall and putting a paragraph about it in your company handbook is not enough. It’s important to talk about harassment seriously with your team, especially management, because this is one of the most common ways for a business to be sued.
2. Ignorance of the law does not exempt you from it.
What you don’t know, can hurt you. Unfortunately there is no law that says, “If you weren’t aware of it, then you can’t be punished for it.”
If you broke some law regarding an employee’s compensation, for example, they can probably sue your pants off for it, whether you were aware of the law or not. That’s why you need to have active legal counsel to educate you about everything that is required of your business.
3. Provide excellent customer service.
Customers are more likely to sue you for something if you didn’t meet their expectations of good customer service; it’s just a fact. If your customer support is excellent for every client, then even if you do screw something up, people are more willing to let it go.
The foremost opportunity you will have to deter a customer from suing is when they have an issue or complaint with you, to take care of them and make reparations in-house. That way, the person may be less likely to feel compelled to take their complaint to court.
4. Observe high standards of health & safety.
It’s in your own best interest, as well as in the interest of your employees and customers, to maintain the highest possible health, safety, and security standards at your business.
A few examples of potential lawsuits that could arise from health & safety issues are: Personal injury from a “slip-and-fall” incident, contaminated food items, personal property damage, product liability due to defective products, and personal injury or property damage caused by poor construction or repairs.
5. The “Four C’s” of a well-drawn contract.
Just like carefully writing your bylaws when you start a business, you should try to think of every possible issue that may arise between you and the client and include it in your contracts, rather than using a generic, universal contract.
Emily Coon of Super Lawyers cites the Four C’s that should be included in your client contracts to protect yourself:
The language used in client contracts has to be perfectly clear. It’s not the place for being vague or beating around the bush, so be sure to say exactly what you mean in such a way that it cannot be misinterpreted.
For obvious reasons, you should avoid using outdated contracts that you’ve previously used, as the contents may not apply anymore, and elements that should be there now may be missing.
As with your business’ internal contracts, including provisions in the contract for handling dispute resolution is essential. If there is no plan for resolving disputes in your contract, you may find yourself in a drawn-out courtroom battle when a dispute does occur.
When there is a dispute between you and the client, the idea is to resolve it as simply and quickly as possible. This is why including the costs associated with going to court is a good way to discourage the client from continuing a battle in court.
1. Emily Coon, “10 Tips to Avoid Legal Pitfalls in Business,” Super Lawyers, https://www.superlawyers.com/united-states/article/10-tips-to-avoid-legal-pitfalls-in-business/13a5a10b-e930-42a0-ae26-28551f9323ad.html
Stephanie is the Marketing Director at Talkroute and has been featured in Forbes, Inc, and Entrepreneur as a leading authority on business and telecommunications.
Stephanie is also the chief editor and contributing author for the Talkroute blog helping more than 100k entrepreneurs to start, run, and grow their businesses.