Preventing someone from filing a lawsuit against your business is like trying to stave off a cold. Take as many preventative steps as you like, but in the end it may all prove futile. The sniffles, like a Complaint or Summons, may hit you in the face in spite of your efforts. While you can’t guarantee your company won’t ever suffer through a commercial litigation matter, our lawyers say there are ways to reduce the risk or limit the financial damage. Print this article after you’re done reading — it might save your company’s bottom line one day.
Incorporate Your Business or form a Limited Liability Company
Sole proprietors can lose everything in a lawsuit involving their business. That’s because the law makes no distinction between their personal assets and their business assets — they are, in fact, one in the same. Forming your company as a corporation or LLC creates a barrier between personal finances and business finances. Anyone suing your company can only pursue damages from your business and cannot seek to put liens on or seize/liquidate your personal property, including your home, retirement funds, or car.
Before the Doors Open: Purchase Liability Insurance for your Business
Even after you’ve guarded your personal assets from a potential lawsuit, you want to make certain your company can actually survive litigation should someone slap a notice to appear on your doorstep. Buy as much liability insurance as the company can reasonably afford — it’ll protect the business from having to pay damages from its own coffers should the suit be successful in court. If you’re a business that has customers walking through its locations, commercial liability insurance is what you want to purchase. This coverage provides protection when people suffer accidents on your property, including dreaded slip-and-falls on wet floors.
Errors and omissions coverage can provide provide protection due to breaches of contract or company errors resulting in financial losses to others. Regardless of your company’s industry, you’ll probably need this form of insurance.
Hire an Attorney to Help Protect your Company
A business or commercial litigation lawyer, on their own, isn’t a shield against any and all lawsuits. What attorney can provide assistance with is understanding the limits of your liability insurance, what your policies cover, and guide you through the contract negotiation process. Legal assistance with that last part — legally binding agreements — can be crucial to lowering the risk of a lawsuit down the road. You might hesitant to hire a law firm, but doing so is one of the better preventative measures available. Make certain the firm has experience with business contract negotiations and commercial liability insurance so you know you’re getting the most effective advice possible for your money. No need to throw your hard-earned dollars down a well on a firm that doesn’t have the requisite knowledge.
If you’re just forming your business, or even if you’ve been established for years in the community, you can still encounter a situation that could end a lawsuit seeking damages from your company. When that happens, you need a dedicated legal team on your side to defend your rights and help protect what’s yours. Call Berkowitz Klein LLP today for an immediate consultation. Our track record of thousands of clients helped speaks for itself.