Business lawsuits are one of the most significant threats facing organizations today. Companies of all sizes, from small businesses to large corporations, are at risk of being sued for a variety of reasons. In fact, lawsuits against businesses are not uncommon today. A survey showed that 43% of small business owners reported having been threatened with or involved in a civil lawsuit.
Businesses can end up being sued for various reasons. You can expect to be sued for breach of contract or if you violate another company’s trademarks or copyrighted materials. A lawsuit could be filed if a customer gets injured on your property, and your business could also face a class action lawsuit if you mishandle customer data.
Such lawsuits can be extremely costly and time-consuming and can have a devastating impact on an organization’s reputation and financial stability. Organizations need to understand the legal risks they face and take proactive steps to protect themselves from potential litigation.
In this blog post, we share some of the best ways to protect your business from lawsuits and your reputation.
Service-level agreements (SLAs) are the best way to ensure that you and your provider are on the same page when it comes to standards and services. You and your service provider can better manage workloads and expectations by creating a service agreement.
Certain businesses are more prone to risk, and therefore, it is highly recommended for them to have an SLA as it helps establish clear commitments with a customer and manage customer expectations. For instance, since they are a third-party company that remotely manages a customer’s IT infrastructure and end-user systems, managed service providers (MSPs) need an SLA to keep them safe from out-of-scope requests and unreasonable service expectations, both of which can negatively affect their bottom line.
In that context, the importance of service level agreements for every MSP firm is immense since they can protect themselves legally when it comes to security issues. For example, an SLA can define the severity levels and circumstances under which an MSP isn’t liable for outages or performance issues, especially if the client has not implemented the recommended security protocols.
Keeping accurate records of your business can help avoid a lawsuit in the event of a dispute. However, it can be hard to decide what to keep and where to store records. So, it can be useful to have a records management plan to maintain records and keep them current.
A lawyer can help you determine what type of formal contract you require. They may include contracts for employment, general sales agreements, and supplier agreements. You should also record important details about every business transaction. Document the products or services you offer, their price, and their delivery date. Keep all relevant records including emails and phone notes.
You should also keep track of all contracts, agreements, inventoried items, and their coverage. All business agreements should be in writing and part of your records management plan. Here are some categories of documents that you may want to keep:
You may be liable for product liability if you sell propitiatory goods. A malfunctioning product can cause serious injury to the user. This user can sue your company for compensation. If the consumer wins, you may be forced to pay a large sum of money depending on the severity and extent of the injury.
It is possible to avoid such lawsuits by offering products that have undergone rigorous quality assurance tests, but this is not a foolproof method. Occasionally, defective products can make it to the market. So, how do you minimize these risks? One of the best ways to minimize the risk of lawsuits is obtaining liability coverage.
Your liability insurance will cover the injuries and losses of a plaintiff if you are sued by a person and found liable. Liability coverage is available in many forms, each tailored to the specific liability and business nature.
As a business owner, it’s up to you to take all the necessary steps to minimize risk and keep your business running smoothly. To minimize the risk of legal action and maintain business continuity, you should follow the tips outlined above as they can safeguard your business reputation and help you avoid legal fines and costly settlements.