Reasons small businesses get sued

​Small Business owners know litigation is costly. It absorbs both time and money and changes the way they do business.  What may surprise business owners are the reasons small businesses get sued, and it’s not just when they make a mistake. 

3 Main Reasons Small Businesses Get Sued

​Unless you are a healthcare provider, you may think your business is safe from lawsuits. You would be wrong. Investopedia quoted 36 percent to 53 percent of small business get sued each year. The Small Business Administration, published a survey reflecting three major reasons small businesses get sued. We followed these with some ways to reduce the risk of legal action against your business.

​1st Reason Businesses Get Sued: Employee Complaints

Employees file complaints of EEOC, Workers Compensation claims and discrimination. While some of those complaints may be due to employee negligence, employees still use this approach hoping for a financial settlement or increased salary to close out the issue.
​Counteract Complaints with Solid Employment Practices.
One of the employment practices to adopt immediately, make sure your firm is compliant in employment and safety practices.   Keep all EEOC posters posted, and make sure they aren’t removed.  
Avoid Hazards Leading to Worker Compensation Claims
Create and maintain a safety plan at work. Evaluate the standard operating procedures of your business for safety. Update those practices regularly.
 Employee Discrimination Complaints
Any worker or management behavior that can cost you your business is a big deal. Talk to your business law attorney about how to set the right respectful tone in your company. Then do so in writing, as well as any other training you need to initiate. 

​2nd Reason for Getting Sued is Business Specific

​Technology companies are often involved in matters of intellectual property, but it could also be an issue with marketing firms that create images and accounts to market the business. Without a detailed agreement outlining who owns the images, accounts, logos etc. your business could be at risk. An attorney experienced in business law can protect your business against seemingly logical assumptions that can destroy the business.
Construction firms blame contractors for structural problems, or for results the client hadn’t understood or expected. A detailed contract, outlining exact provisions and their specific costs, is critical. If needed, consult your attorney about how to amend the agreement to show any changes to the order or cost.

​3rd of Reasons Small Businesses Get Sued is Customer Satisfaction

Business need satisfied customers to stay in business. today, unhappy customers go online and write negative reviews that are read by millions. Small business owners might reduce the invoice or add services to make the customer happy, but it doesn’t always work. Customer dissatisfaction is one of the common reasons businesses get sued.
The solution always begins with a well-drafted, detailed agreement describing what expectations both parties should have for the transaction. Putting those expectations in writing helps to set them. At The Finman Law Firm, we’re confident of drafting the right template, or specific contracts to protect your business. Get more information free by contacting us here.
We know you want to trust those you work with. Whether it’s an employee, customer, vendor or other company, you still need to protect yourself with straightforward steps.
·   Put every agreement in writing, understand the terms and follow them.
·   Keep records as events happen, so your memory is fresh and the records are accurate.
·   Be careful with those records you create and keep. Documenting everything protects you in case of a complaint or problem.
·    Seek counsel with a business law attorney before you draw up or use an agreement. Having the right agreement could not only save time and hassle; the right agreement could save your business. 

Please Note:

​The preceding article is not meant as legal advice, but is solely intended for informational purposes only. To get more information on negotiating to buy a small business and other business law matters, visit our home page at https://finmanlawfirm.com/.