Compared to years ago, the business place of today has more government laws and regulations than before. From unfair competition, age discrimination, sex harassment, environmental compliance, to accommodating workers with disabilities, every business faces an ever-evolving list of legal threats. These are in addition to the more common business risks of accidents, dissatisfied customers, protecting your brand, taxes, and contracts.
As legal risks and, consequently, the potential for lawsuits increase, so does the need for business owners to take steps to manage and minimize these risks. Taking the following simple measures can assist your business in avoiding a lawsuit and, in the event one does arise, increase your chances of success.
Review Contracts Before Signing
Sometimes the most obvious measure is the one least implemented. Unfortunately, many businesses lose money or get deeply entrenched in lawsuits because their owner or employee did not read a contract before signing it or having a lawyer review and explain its terms. It is best practice to your lawyer review a contract before you sign it, especially important ones like leases, loans, or anything requiring performance for a number of years. By having your lawyer review the contract before your sign it, you will be altered to provisions you may be unaware of but which can cause disputes later. In addition, doing so will allow you to include terms that will benefit you in the event of problems, such as provisions to limit your liability. If you cannot have a lawyer review a contract, be sure to read it carefully before signing. If you are unsure about anything, seek legal assistance to better understand.
Handle Customer Complaints Properly
Implement a system to handle customer concerns and complaints so they do not become serious issues or, eventually, costly lawsuits down the road. Consider these key points for your system:
- The person handling the complaint should be a person with authority to resolve the issue; requiring a customer to repeat their complaint to multiple individuals only magnifies dissatisfaction.
- Timely document all conversation concerning the issue either through written or electronic means. A written record will certainly help if the matter becomes a legal problem.
- Build goodwill through reaching a prompt and appropriate solution, even if it involves some expense. The time and money spent on making a customer happy is often much less than that of litigation.
Keep Your Premises Safe
Personal injury lawsuits involving customers injured on the premises of a business are very common. These cases often arise from the negligence of a business person in failing to abate or warn of a dangerous condition on premises. To reduce the risk of personal injury claims, ensure hallways and stairs are properly lit, and that tripping hazards such as loose stairs, uneven flooring, torn carpet, or other dangers are promptly repaired or, at the very least, appropriately signed warning individuals of the danger.
In addition, it’s also smart to conduct regular inspections to make sure your entire premises are safe, including the work area, customer area and parking lot. In most states, including Ohio, you can be held liable for an injury not only if you knew about a danger and did not abate it, but also if you should have known about it.
Research Your Business's Name
Too often businesses are surprised when a customer, competitor, or another business demands that they change their business name, saying they've been using a similar name for years, or face legal repercussions. If this occurs, years of building an identity and brand could be squandered.
Disputes over business, trade, or product names can quickly evolve into expensive and time-consuming lawsuits. To help prevent disputes, have a trademark search conducted to ensure your desired business name is available for use, and then have it trademarked to prevent others from using it.
Reduce The Risk of Lawsuits Between Owners of the Business
Many business lawsuits are between the several owners of the business themselves. Owners may disagree over the direction of the business, or they may want to buy out each other's interest. Having a buy-sell agreement, which is an agreement between the owners of the business setting forth a plan as to what will occur upon the death of an owner or if he or she wants to sell his or her interest, can make for a smooth transition and avoid a lawsuit.
Disputes involving investors or shareholders are common. Businesses can run afoul of securities laws when raising money, and this can lead to serious legal consequences. To help avoid legal problems, seek legal counsel when your business raises funds (including from friends and relatives) to ensure that you are complying with all securities regulations and other laws.
Protect Yourself In Case of Disputes With Suppliers
Disputes can arise from dealings with suppliers, such as unfavorable payment terms or getting poor quality products or services. A good supply or purchase contract tailored to your business needs will protect you when buying goods or services, including by making sure there are proper warranties. It can also help you in the event of claims arising from these goods or services. For example, asking your suppliers to agree in writing to indemnify you for claims relating to the goods or services they provide can give you a significant amount of protection.
Keep Sales Materials Accurate
The drive and desire to increase your bottom line can sometimes leads to sales and promotional materials promising more than you can deliver. Review all written sales materials your business distributes. Re-evaluate your sales presentations. In doing so, ensure that sure all statements — written and oral — are true, accurate, and that promises can be kept. It’s not uncommon to hear a case of a business being sued for misrepresentations made during the sales process; it is especially troublesome if your expertise is relied upon by the buyer in making a decision.
Use Care In Hiring Employees
Although Ohio is an “at will” state – meaning one can be terminated or even quit at any time -- employment-related disputes are extremely common. Whether it's a former employee who feels he or she was improperly terminated, a current employee upset about a recent demotion, or a job applicant who claims discrimination, these are reminders to take steps to prevent problems. To reduce the risk of employment-related lawsuits, consult a lawyer before terminating, and even disciplining, employees. Also, have employment documents like job applications, contracts and employee handbooks reviewed by a lawyer to reduce disputes from their contents.
Some lawsuits cannot be avoided. To minimize their cost, review your insurance policies to make sure they will help defend claims.
These are some of the areas that are most likely to be the source of lawsuits involving your business. Taking a few proactive steps in these areas can help prevent time consuming and expensive lawsuits. Having proper insurance can reduce the cost of lawsuits that do occur.
Contact an attorney at Triscaro & Associates today. Please call us for all your legal needs. We offer a full range of legal services to individuals, families and businesses, including personal injury, estate planning, real estate, family law and business matters. We are dedicated to providing the highest quality legal services at a reasonable cost.