A lawsuit is a type of civil legal action that is determined in court. Usually, one party is suing another party for money, property, or other damages. A party can refer to an individual, business, or government. The party who is suing is known as the plaintiff. The party who is being sued is called the defendant. If you’re a small business owner, you risk being sued for various reasons. Read on to find out how to minimize the risk of a lawsuit.

Lawsuits and Small Businesses

You may have seen a number of lawsuits against large companies on the news. Some lawsuits seem frivolous and even laughable to the American public, although the plaintiff sometimes ends up walking away with thousands of dollars. One such notable case occurred in 2009, when Lauren Rosenberg sued Google for over $100,000. She was advised by Google Maps to walk across a freeway to get to her destination and was hit by a car and seriously injured. A court ruled that Google was not responsible for the accident as Rosenberg did not have any pre-existing legal agreement with the company to get her safely to her destination. While large companies like Google can afford to cover the costs of defending themselves in court, small businesses might find themselves in a more compromising financial position when facing a lawsuit. If you’re a small business owner, it’s up to you to protect your company by eliminating risks.

Watching What You Say and How You Act

Avoid doing business that might be considered questionable or in bad taste. Anything that is potentially slanderous to a rival or competitor is off the table. Libelous statements should also be avoided. In addition, who you choose to do business with is important. Collaborating or working with people who are known for dubious business practices can compromise your reputation. Even if you think your company’s ethical code is better than theirs, you need to watch that you’re not dragged down with them if they happen to get into trouble. In addition, minimizing risk means eliminating any conflicts of interest. For instance, if you are a member of the local city council and pass a bylaw that benefits your business, you might find yourself under fire. It’s best to identify possible conflicts of interest before you get into hot water.

Getting a Good Attorney

Every small business owner should have a competent attorney whom they can trust. He or she should have specialized knowledge of the laws in the area or region that you do business in. An attorney can help you to foresee possible lawsuits. If you do get sued, your attorney should be the first person you go to. He or she can advise you on how to proceed. Always interview a few potential candidates before settling on the attorney you would like to give your business to.


Quick Summary

If you are a small business owner, lawsuits can be a nightmare. While large companies have more resources to fight lawsuits, when you’re an entrepreneur a lawsuit can destroy your reputation and even your company. Hire an attorney to minimize the risk of a lawsuit.