Running a business is difficult—you’re required to make strategic decisions every day that impact your company’s operation, profitability, and public image.

Though not usually at the forefront of your mind, these strategic decisions must take into account how you can protect your company from a lawsuit. A lawsuit is one of the greatest threats businesses face. Getting sued can not only derail your company financially but also risk the future survivability of the company.

Anyone who has a connection with your company can potentially file a lawsuit against it, from employees to clients. Although always a threat, future litigation can be mitigated if business entities take certain proactive measures.

Establish Proper Business Structure

Did you know that it’s possible for your personal assets to be at risk if your company is sued? If your business is not structured properly, you could lose your assets (house, savings account, etc.) if a lawsuit against your company is successful. Choosing an operational structure for your business that separates your personal assets from the company’s assets is critical.

The most common business structures that accomplish this goal are a limited partnership, a limited liability corporation, and a corporation. Though the filing processes and operation structures are different, all three of these business entities provide separation between the company’s liability and personal liability—meaning your assets are protected if your company is liable for monetary damages from a lawsuit.

Every business is different. Deciding what organizational structure is right for your company can depend on a multitude of factors. Contacting an experienced attorney can help you navigate the complexities of a business organization so you and your company are protected going forward.

Acquire the Right Insurance Coverage for Your Company

All states require operational business entities to have insurance. Though monthly premiums can be expensive, insurance can protect your company from possible financial ruin if a lawsuit against it is successful. General liability insurance is often the only type of insurance your company will be required to have. This insurance protects your business from general liability claims—if someone is injured on your company’s premises, your company’s product injured someone, or your company caused property damage.

General liability insurance does not protect your company from all types of potential claims. You need to evaluate your company’s specific risks within the confines of your industry to determine if additional insurance coverage is necessary. For example, general liability insurance does not cover damages awarded from lawsuits brought by current or former employees. Getting sued by employees often results in the most expensive lawsuits a company can face, so having proper employment liability insurance is vital.

If your company deals with professionals providing a service, malpractice insurance is necessary. Like choosing the proper structure for your business, choosing the right insurance policies to carry requires a detailed analysis of your company’s operation. You do not want your company facing a lawsuit in an area for which you are not covered.

Set Up Clear, Non-Discriminatory Policies for Employees

This step goes beyond what a company does externally and focuses on internal behavior. As stated above, lawsuits from employees can have disastrous financial effects on a company. All companies must ensure they have a sound, written human resources policy that effectively addresses potential employee concerns, like discrimination and reasons for termination.

No company should adopt polices and procedures that have a discriminatory effect on employees. All employees should be treated the same regardless of race, sex, religious views, sexual orientation, or gender.

An employment attorney experienced with federal and state law can help you draft policies that accomplish your goals on non-discrimination and make sure these policies stand up against legal scrutiny. Companies should have policies pertaining to how and when an employee can be terminated. You do not want to find your company in the position of defending a wrongful termination lawsuit without having any written termination policy to substantiate your decision. Effective record-keeping of employee issues is also essential. Whether a current employee lodges a complaint or a former employee files a lawsuit, you want to ensure your company has proper documentation highlighting the steps you took to address the issue.

Your company’s conduct should be compliant with respect to not only your employees but also your clients or customers. We operate in a virtual world, and companies must ensure they have adequate privacy protections in place for client and customer data. If your company lacks effective technology, you risk potential lawsuits relating to data breaches or loss of important data.

Work with Commercial Litigation Defense Attorneys to Protect Your Business

As a business owner, your focus is running a successful entity in your industry. To ensure your company’s success, having an attorney or team of attorneys to provide legal oversight to your business is essential. An attorney can make sure all your legal obligations are met and can advise you as to any potential legal issues you may encounter. Your job is not to be an expert on the law. An attorney’s job is. The right attorney for your company can effectively stem potential lawsuits before they arise.

The attorneys at Oberheiden P.C. have decades of experience in advising clients in all facets of employment law services, including comprehensive federal employment law compliance representation, dispute litigation, and corporate structuring. Our team includes only senior attorneys who have extensive experience in federal practice, and our unique team approach ensures that clients receive the full benefit of each attorney’s collective knowledge and insights.

We’ll address your concerns and help protect your business from litigation. Get in touch with one of Oberheiden P.C.’s attorneys today by calling 214-692-2171 or by visiting our commercial litigation page here.

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