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7 Tips for Defending a Small Business Against Lawsuits

When you’re preparing for all of the things that can go wrong with your small business, it can be easy to overlook lawsuits on the list of potential problems. However, every year, thousands of small businesses face court cases that result in financial losses, and many of them wind up going under in the aftermath of the ordeal. So, it’s always a good idea for every business owner to take precautions to safeguard their company from the potential consequences of a lawsuit.

That being said, here’s a seven-step guide you can use to position your small business for a positive outcome when faced with negative litigation.

1. Post Clear Terms & Conditions

Just as it is important to use disclaimers, it is also wise to have a lengthier terms & conditions page that covers every single possible liability and issue in detail. Again, this is a document that you may need to obtain professional assistance with, as wording it wrong or leaving out important information could have serious consequences in the long run.

2. Develop a Comprehensive Disclaimer

Posting a detailed disclaimer on your website and/or invoicing material is a great way to protect yourself from lawsuits by clearly listing liabilities that your company cannot be held responsible for. Try to go beyond the typical template-based disclaimer and really address any odd concerns that could open up the possibility for a lawsuit in the future. Ideally, you’ll want to hire a legal professional to draft your disclaimer and ensure it is properly worded so that it can serve as the basis for a solid defence if needed.

3. Have a Solicitor On Standby

It’s usually not a good idea to go it alone in a business lawsuit and waiting until the last minute to seek help isn’t very smart either. If someone has threatened to sue you, it’s imperative that you contact a professional law firm and consult with one of their solicitors to discuss the case. You may even need a solicitor to assist with contracts and other aspects of running a business. You want to pick a firm that can cover all aspects that you may need, this way you become familiar with your solicitor and they can become familiar with your business.  You can find a handful of firms that cover all relevant services, in particular Harper James Solicitors offer services for employment law, business law and finance law. This makes them an ideal pick for a strong legal defence.

4. Practice Detailed Record Keeping

Legitimate documentation and records are typically the best possible defence that you can bring to court as evidence that your company is in the right. Keep thorough records of all correspondence, invoice, receipts, contracts, and any other data that relates to your dealings with customers, clients, suppliers, manufacturers, distributors, and any other parties that could potentially sue you in the future.

5. Obtain Professional Assistance when Creating Contract Terms

While you may be confident in your ability to draft a proper contract, if your goal is to minimise the possibility of ever being sued or losing in court, hiring a solicitor to help with contract drafting would be your best bet. Fortunately, this is a service that you can utilise on a one-off basis if you’re going to be using the same contract for all of your deals. You can continue using the professionally drafted contract as a template, changing only small details with each new client as and when it is necessary.

6. Have an Effective System for Addressing Complaints

Complaints are like tiny precursors to lawsuits because they’re the first sign that someone is upset with your company about something. Therefore, a properly addressed complaint can actually be equated to a prevented lawsuit in some cases, which is why it’s necessary for every company to have a reliable complaint filing system. Otherwise, concerns can be swept aside by employees and then you have someone who is actually angry enough to sue when all of that could have been avoided if their initial complaint was responded to appropriately.

7. Try to Settle Out of Court

If you have received threats of litigation and you believe there is even a remote possibility of a legitimate cause for concern, perhaps because you fear that the case probably won’t be dismissed, it’s best to try settling out of court. This will usually involve offering up some kind of compensation to the party that wants to sue you, but it may be cheaper and less hassle than paying legal fees and then losing in court in the end.

The Consequences of Losing a Lawsuit as a Small Business

Negative litigation can bring surprisingly dire consequences to small businesses because the overall costs are usually much higher than you would expect. Having to cover legal fees and damages can put a major dent in a company’s finances, and in many cases, the business simply can’t recover from the loss of funds and, even worse, a damaged reputation. Even a seemingly small case can wind up costing tens of thousands of pounds and causing many weeks of stress and anticipation over the outcome of the case.