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A litigious society gives rise to a number of myths. Among them is the ever-present possibility a business will be regularly sued. It starts the day a company is officially recognized and the state requests a name and address for an “agent for service of process.” What does that mean? It’s the person who accepts the paperwork if someone sues!

The reality of the situation, however, is a little different. Threats of lawsuits are almost as common as requests for business cards. The percentage of those aspiring legal epics that actually make it to trial is minimal. So how can a small business person evaluate their real potential exposure to legal action?

Equal Opportunity Defendants

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Anyone can be sued for any reason at any time. Whether or not the plaintiff will be successful in pursuing their case, however, is much less certain. Leaving aside for the moment all the legal details, lawsuits are expensive, both in terms of time and money, even if they are only minimal small claims actions.

The threat to sue can always be carried out. Making a business immune to legal action is virtually impossible. The key is to be prepared to avoid the most common kinds of liability.

Common Causes

Personal injury is by far the most likely category for extemporaneous legal action. The reason is because so many everyday occurrences ranging from slips and falls to loud noises to bumps and bruises can be interpreted as the negligent act of someone with the capacity to write a big check.

The easiest way for a business to minimize this kind of legal action is to take the necessary steps to mitigate anything that might be interpreted as negligence. By and large, all personal injury cases boil down to an attempt by the plaintiff to paint the defendant as callous and negligent. If you are able to avoid this label, the chances of a come-as-you-are plaintiff prevailing in a personal injury case are minimal.

Follow the Insurance Agent

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Avoiding legal action is one thing. Protecting your business from an unfavorable outcome is another. Most small business owners have insurance as a matter of course. Some have no choice, as they often occupy property not their own and must have liability protection as a condition of their lease or building financing.

What some businesses miss are the opportunities made available by insurance companies to learn how to reduce their claim exposure. Like drivers who take additional courses in safe driving, business owners can learn from their insurance companies how to structure their policy and build their businesses to be safer, more customer-friendly and harder to portray as the at-fault party in case a customer decides to make good on their threat to litigate.

It’s impossible to immunize a business against lawsuits. However, it is quite possible to reduce the chances of an unfavorable verdict to the point where it won’t have a significant impact on growth, profitability or success.

 

References

LegalZoom.com

Robinson & Henry

Faces of Lawsuit Abuse

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