Four brand risks to manage when facing litigation

| Apr 7, 2021 | business litigation

Infringement on your brand or trademark is not the only way your brand could be put in jeopardy. You may well know that any form of litigation could put your brand at risk. And as we have seen in the last few years, it does not take much for one issue to affect a brand’s image and lead their reputation to suffer.

As a business owner, you must also be aware of specific risks your brand could face – and where they come from – so you can effectively mitigate the impact of these risks.

Four parties business owners must address

The threat to your brand stems from the particular lawsuit, naturally. However, this threat can have a powerful ripple effect.

Nowadays, many of these risks arise in the digital world. However, whether the threats are online or not, many of these consequences center around the business relationships you maintain, including:

  • Consumers: This one is a commonly known risk. When brands face backlash from a lawsuit, consumers will often stop purchasing goods or services from the company. In turn, this can lead to a sharp reduction in profits. However, as we have discussed in previous blog posts, consumers often take to social media to criticize the brand as well.
  • Business partners: Partnerships with other businesses may also suffer. To protect their own brand, they might try to disassociate with your business as soon as they can. Deals can fall through, and contract disputes could result.
  • Investors: Shareholders and investors in your business might also take action when the brand is in jeopardy. For example, as we discussed in a previous blog post, shareholders filed a derivative lawsuit against the social media company Pinterest when the brand started to suffer from the other legal actions they faced.
  • Employees: Both former and current employees might also try to distance themselves from your brand in the face of litigation. For example, current employees might disengage from operations or even resign. This can lead business to suffer even more.

Mitigating the effects that a lawsuit could cause your business is already a priority, but California business owners must make sure they confront these four risks head on and secure these important relationships.

Beware: These parties can multiply litigation risks

Any dispute or public complaint can reflect on the brand – regardless of whether it is a former employee’s claim to the Equal Employment Opportunity Commission, or if a business partner accuses another of breach of contract. One issue can quickly spiral, and all four of these parties could add to a business owner’s stress by taking legal action.

When these cases multiply, the brand you worked so hard to build could suffer even more. That is why business owners must be vigilant in their strategies to protect their brand, whether or not they face litigation.