How To Reduce The Risk of Lawsuits


Each and every business, both big and small, will do their best never to receive a lawsuit. Nonetheless, they are a very real danger to business owners both in terms of finances and in terms of your reputation. But what can you as a business do, in order to protect yourself, your employees and the business itself?

Be aware of what you are saying and doing

First, limit any conflicts of interest – no matter the benefit to your company in the short term, it will not be worth the fallout. Don’t associate yourself with unethical groups or companies, because any damage to their reputation will damage yours just the same.

If your company involves itself in social media in any way, shape or form, be aware of what is being said and when. A poorly timed Tweet can have dire consequences, regardless of the intentions. Take this for example: after the Aurora cinema shooting in 2012, company CelebBoutique failed to check the reason ‘Aurora’ was trending on Twitter, made a joke in reference to the hashtag, and shortly found themselves facing customers calling for a boycott. In a world where a company’s poor behaviour can influence customers within seconds of it being made known, you cannot be too careful when it comes to your public image.

The idea of a lawsuit being issued over a Tweet can seem downright laughable, but it has absolutely happened, and will likely continue to.

Educate your employees

Naturally, this ties into being aware of what you are saying and doing – your employees must be aware, also. A lack of professionalism on the part of any one of your employees can have knock-on effects for the whole company. They are a part of your business image just as much as you are, so keep them in the loop at all times.

Communication among your team is vital, as is conflict resolution, decision-making, and organization. Find out the best ways of building an effective team, and remember that a chain is only as strong as its weakest link.

Protect your documentation

If any of your files are lost or stolen – which is more likely than many people think – your company may face a lawsuit. It is vital for any company to keep their computer systems as protected, secure and virus-free as possible. Invest in as many antivirus and security programs as possible to keep your computers up to standard. To prevent systems being hacked, try and make sure passwords are changed on a regular basis – and also make sure that employees don’t casually give them out to unchecked people.

Paper documentation is at risk as well. In the event of a fire, it will almost certainly be lost, so make sure that instead of a filing cupboard it’s stored in a fire-proof, lockable safe.

One of the best things you can do to protect yourself is make backups of every piece of documentation you receive – store information both on computers and on paper, and make sure to do this on a regular basis. Documentation is vital for the running of a company, and yet due to accident, natural disaster or malicious behaviour, it can easily be lost. Don’t let this happen to you!

Insure your business

Don’t take the risk: insure. If another party suffers losses due to the actions of your company, you will absolutely be liable for a lawsuit. Research what the requirements are for your business to meet so you can get the liability insurance and weigh up the cost of a policy versus the potential damages if you do not get it – bearing in mind that any lawsuit, no matter how small, can bankrupt a company.

If you have any property owned by your business, you should also take out insurance to protect this – any buildings, tools, or computers that you have. It will save you having to replace them out of your own pocket should they be damaged, burgled or otherwise lost.

When it comes down to it, these are very easily attainable objectives. Don’t take the risk – just follow these steps and you will absolutely save yourself problems in the long run. With that sorted, you can focus on your customers instead!


Patrick Gibson

I am a property development student at UTS . I'm an aspiring blogger and I mostly write articles about home improvement, renovation and property market. In my free time I enjoy spending time with friends, reading and hiking.