It is essential to take all reasonable precautions to avoid risk and keep the firm operating correctly. However, how do you minimize the risk of a lawsuit while maintaining business continuity? How you can protect your legal interest as an entrepreneur.
While no one can forecast every possibility, there are five things you can take immediately to safeguard your firm against potential lawsuits, according to criminal defense lawyers.
Here are some things entrepreneurs or business owners can do to safeguard their legal interests:
1. Monitor your words and actions.
The image of your business is critical. This is one reason business owners and employees should avoid making public statements or partaking in any dubious business. This includes making defamatory or potentially slanderous statements and avoiding dealing with dishonest individuals. Working with a group of individuals infamous for questionable business activities may not seem concerning because you are confident in your company’s ethics. Still, if they are exposed, your company’s name may be associated with them in the aftermath.
Additionally, you and your staff should minimize any conflicts of interest and avoid situations where one might occur. Such cases might ruin your reputation as a business owner and land you in hot water with the law.
2. Retain the services of a knowledgeable attorney.
Consult attorneys before beginning a business to guarantee you have legal representation. If you’ve been sued, you may require legal counsel before taking action or advise you on the best course of action to take.
It’s a good idea to employ an attorney knowledgeable with the local laws and customs in the area where the business works and, if necessary, have industry experience. Hiring a tax attorney may make sense if your company anticipates legal issues with the IRS or a state department of taxes.
3. Disassociate yourself from your business.
Numerous entrepreneurs employ sole proprietorships to own and operate their businesses. This can be a problem if the company is for a crime, as the owner’s personal property is confiscated or attached in a court of law.
One way to mitigate the possibility of a lawsuit being filed against an owner’s assets is to own the business through a trust. Trust is the legal entity that can hold real estate, companies, cash, securities, and a range of other assets and files its tax return in most cases.
4. Insure yourself personally.
Every business should carry liability insurance if a customer slips and falls at their establishment. Insurance against errors and omissions is also recommended for specific professionals, such as insurance agents and consultants, to cover their organization if a customer or client accuses them of making a mistake or failing to complete a contract.
5. Ensure the security of your files.
Today’s businesses rely primarily on computers, which needs a strong emphasis on computer security. Companies must ensure that their computers are equipped with up-to-date antivirus and other security software. If a virus compromises a computer system, a company may be unable to provide certain contracted services. Additionally, critical files may be lost or stolen, potentially leading to legal action by clients and suppliers.
To make it easier for the business to carry out its mission when nature throws you a curveball, consider acquiring alternative work locations, portable generators, call trees, and the ability for employees to work remotely.
Final Remarks
Business owners are responsible for protecting both their businesses and personal assets in the case of a lawsuit. With these five actions in hand, your business should be better equipped to avoid legal action—or to confront it head-on and emerge unscathed.
