Small business owners: How you can prepare for a lawsuit

No business owner wants to be sued. However, the fact is that disputes can and do arise involving employees, partners and third parties, despite efforts to avoid them.

As such, it is important for owners to prepare for potential lawsuits. Knowing that there are protocols and resources in place to respond to a legal claim can make it less intimidating and overwhelming if the situation does arise.

Prioritize good recordkeeping practices

Whether a dispute involves an employee claiming unpaid overtime or another entity seeking remedies for an alleged contract breach, having solid records can be vital in protecting the company. This includes timesheets, email correspondence and copies of any contracts or agreements you have.

The better your recordkeeping practices are, the more effectively you or your attorney can respond to claims.

Err on the side of caution when communicating

As this article notes, everything you say or write before and during a lawsuit can be under scrutiny. As such, you would be wise to have a plan in place for how people in the company should communicate. You might ramp up security on email correspondence, for instance, or avoid making overly specific claims that you may not be able to back up.

You might also decide to leave all legal communications up to just one person, like a spokesperson or attorney to control the information coming from your company. You can provide directions for others on what they can say should the situation arise. This could include "no comment" or an explanation that they are not at liberty to discuss the details of a lawsuit.

Have support

Business owners may be experts when it comes to running their business, but they may not know everything about matters like regulatory compliance, contract laws or the legal system. This is why it is crucial to put a support team in place to respond to these complex issues and help minimize potential disputes and repercussions.

Having these elements in place before a lawsuit ever arises can make it easier for business to respond to one. They can also allow a business owner to avoid them altogether or resolve them as quickly as possible.

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