Business owners usually try to minimize expenses whenever possible. But some factors are hard to pin down. For example, can you ever really predict whether someone will sue your company or not? Actually, there are ways of managing business litigation risk. That’s what we will look at in this article.
Is Business Litigation Risk High?
In part, that depends on your industry. Some types of business are riskier than others, including:
- Manufacturing,
- Retail, and
- Healthcare.
However, according to a study, 36 to 53 percent of small businesses are sued annually. If you are a small business owner, business litigation risk should be a concern.
But what can you do to minimize that risk?
Pay Attention to Your Contracts
Many lawsuits relate to contract disputes. You can minimize this business litigation risk by having your attorney draft or review every contract before signing it. Even simple language that’s missing or misunderstood could increase your chance of being sued or having to sue another party.
Contract law is complex and best left to professionals.
Hire a Lawyer That Understands Business Litigation Risk
Typically, you will need to choose someone with in-depth knowledge of business law. It’s particularly important to find a business lawyer who also has experience with business lawsuits. In fact, some companies even hire a corporate counsel who intimately understands that company and has the required business law experience.
The risk is too high to leave your company’s legal matters in the hands of a non-specialist.
Keep Detailed Records
Periodic reviews of your business records might expose any otherwise overlooked business litigation risk. If the worst happens, it will be easier for you to gather evidence to support your claims or defenses.
Decrease Business Litigation Risk by Quickly Addressing Complaints and Disagreements
You and your attorney might be able to settle legal disputes without the need for costly business litigation. Risk could increase with each day that you let a problem slip through the cracks.
Make the most of your business lawyer’s skill by asking for help before things get out of hand.
Consider Alternative Dispute Resolutions
Mediation and arbitration are two common alternative dispute resolution methods. Either one can be used before or after a dispute turns into full-blown litigation. There are several advantages to mediation and arbitration:
- Cost savings. Typically, alternative dispute resolution is less expensive than a trial.
- Business Litigation Risk. Sometimes it is possible to settle a dispute before anyone files a lawsuit. This also tends to decrease your litigation costs.
- Privacy. Medication and arbitration are not as public as a courtroom battle. In some cases, your dispute can remain confidential and stay out of the public record.
- Control. The participants in a mediation or arbitration usually have some control over scheduling and other factors. Also, and probably more importantly, you can minimize business litigation risk because you won’t have to place your dispute before an unpredictable jury.
As noted above, many businesses are sued every year. But there are ways a business owner can minimize or avoid exposure to litigation.
Talk to Us About Managing Business Litigation Risk
Risk is always present when running a business. However, we can help you develop strategies that minimize the risk as much as possible.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.