Owning and operating a small business is full of risks, both personal and financial, and lawsuits are one of those risks. As a business owner, there is always the chance you or your business will end up in court on the defense end of a lawsuit. This is especially true if you own a business open to the public, like a shop or a restaurant, or a business that employs workers other than yourself.
Taking steps to protect your business from a successful lawsuit is part of the cost of doing business. Take a look at a few tips that can help you head off a lawsuit before it starts or succeed in court if a lawsuit is unavoidable.
Create a Comprehensive Employee Handbook
A good employee handbook should do two things. It should clearly outline your workers' rights and responsibilities, and it should provide plans of action for your employees to follow in given situations. This protects you, your employees, and your customers. If everyone follows the rules and action plans given in the employee handbook, there should be no need for a lawsuit.
A disgruntled former employee will have no grounds to sue if the procedures for termination in the handbook were followed. A customer shouldn't have a reason to sue if you've given clear rules for employees to protect customers and your employees follow them.
When creating a company handbook, you should make sure it's clear and easily readable, and that it addresses as many foreseeable circumstances as possible. Before finalizing your employee handbook, you should have it reviewed by a legal expert, just as you would any contract. This will ensure your handbook is complete and the wording you used will hold up the way you would want it to in court.
Solve Problems Before They Become Lawsuits
When it comes to lawsuits against businesses, you can learn a lot from looking at the mistakes of other companies. For instance, one very memorable lawsuit against a popular fast food chain occurred when a customer spilled hot coffee on herself after ordering. A jury found in her favor, and the restaurant chain was ordered to pay a large sum of money.
While this is often cited as evidence of a culture of frivolous lawsuits, the facts of the case tell a different story. Not only were the customer's injuries truly severe, examination of the documentation in the case showed that the fast food restaurant had received over 700 similar claims regarding the dangerous temperatures of their hot beverages in the past.
In other words, they should have been well aware of the problem and taken steps to fix it long before the case in question. The lesson for you, as a small business owner, is that identifying a problem and taking steps to solve it can save you a lot of money. Meanwhile, evidence you failed to solve a problem you knew about can cost you a lot of money.
It may seem obvious that you should address safety hazards or other problems before someone sues, but not all problems are as obvious as the temperature of a drink. Soliciting feedback from your employees and customers can help you spot and address less obvious problems before they become legal issues.
When it comes to court proceedings, documentation is everything. Without it, court cases come down to the word of one party against the other, and judges and juries have the difficult task of determining which party is more credible. Documentation removes that uncertainty.
Don't rely on verbal agreements, especially when conflict is involved. Verbal communication can be very important in conflict resolution, so don't avoid it, but be sure to follow it up with written communication, contracts, invoices, or other paperwork as appropriate. Be sure to save copies of any written documents and communications, including emails, for your own records, as these can protect you later in court.
Of course, the most important thing that you can do is to have a lawyer on retainer who is familiar with business, injury, and employment law in your area. Don't wait until a lawsuit has been filed to find a good injury lawyer that can represent your business's interests.