How to Prevent Small Business Lawsuits

A new commercial venture owner more often than not is preoccupied with cash flow, sales figures or scaling concerns rather than worrying about legal issues and they are caught napping when such a problem arises. Small business lawsuits are far more frequent than one thinks and any proprietor must keep the following points in mind while running day to day operations.

Careful Paperwork

Every deal or transaction must be must be documented properly with all the relevant details like the service provided, dates and prices clearly mentioned preferably with the other party’s signature or seal. No matter how cordial your relations with the other side, you never know how and when a misunderstanding can occur, and therefore keeping a written record will be of immense help which will negate any chance of it happening. Itemizing bills and keeping daily records along with filing all required tax returns on time can seem a very complex and painstaking task for a new entrepreneur and hence getting professional help is recommended. In the unfortunate event of getting a litigation notice, genuine records can be of great value as they can be admitted as proof and help in getting a favourable result.

Employee Litigation

A most common legal trouble comes in the form of a disgruntled worker suing you for wrongful termination or any pay dispute. First and foremost, it is essential to know about all employee laws and regulations applicable to your establishment and fulfilling all compliance requirements. Formulating a foolproof contract and job offer letter clearly outlining all the terms and conditions of employment along with those related to severance is a deterrent against any claims in the future. Hiring a competent Human Resources consultant will be beneficial as such a person has the requisite knowhow to draft such documents in addition to implementing policies for ideal working conditions so that dissatisfaction among the staff is kept to the minimum.

Intellectual Property Infringement

It is surprising how little awareness is about these transgressions and how many small business lawsuits are related to a trademark or copyright violations. A business owner invests time, money and other resources in designing a mechanism that can be used for marketing purposes and in case of unapproved usage the law grants protection in the form of intellectual property rights which include monetary compensation by fining the guilty party. Most of the time owners give their consent to using a particular image, slogan, artwork or any other branding tool for the promotion of their product without checking about their proprietary status and it can result in not only financial setbacks but also in harming the image of the firm. Lawyers specializing in the field can provide guidance on how to steer clear of such matters and advise you on the approach when there is an urgent need to use copyrighted material.

Get Insurance

Running a business is associated with numerous risks, financial as well as legal and it is advisable to get a liability insurance and which safeguards an owner from most of such hazards. Purchasing business insurance is just as important as purchasing health insurance. Insurance companies offer numerous and varied plans covering almost all aspects of a commercial enterprise like property damage, employee workplace accidents, data breach, professional mistakes etc. Costs incurred because of these incidents can put an excessive burden on the firm and in absence of any protective plan, proprietors have to shell out the money from their own pockets. It can be quite distressing for smaller groups and therefore to limit one’s responsibilities and shield personal assets from depletion, one should buy a comprehensive protection plan.

Hire a Law Firm

Prevention is better than cure and if a lawyer is hired right at the beginning of the venture then most of the mishaps can be averted and in case any difficulty does arise, sound advice is guaranteed to help you out of trouble. There are many firms providing specialized legal services for startups, and they have professionals who can give counsel on every facet of running a business, right from tax and compliance laws, agreements, promotional material to employee contracts. The complexities of issues involved in running an establishment make it pertinent to have a competent law practitioner by your side.


Small business lawsuits can be stressful and time- consuming but they are not totally unforeseeable and with the able professional help one can preempt and avert them. The best way to avoid or keep these problems to a minimum is to conduct operations with an ethical and honest mindset.

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Amy Jones

Amy Jones has been serving as an experienced legal expert in Ahlawat & Associates who have Intellectual Property Lawyers team across the globe. She is a passionate writer and always on the lookout for opportunities for sharing her knowledge with legal community.

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