An Ounce of Preparation: 6 Key Actions for Preventing Business Lawsuits

Some say the best defense is a good offense, but when it comes to preventing business lawsuits you’re better off avoiding offense all together. Another old saying goes: “An ounce of prevention is worth a pound of cure.” Now that one couldn’t be truer when it comes to avoiding litigation. Why test your small business insurance when you can arrest issues before they become problems? Taking these key actions will help you prevent business lawsuits—but if you, like many companies, do face a lawsuit, your insurance will provide the backup to keep you afloat and handle the financial burden.

1. Put. It. In. Writing.

It’s not a deal until it’s on paper and signed by both parties. You can shake hands, pinky swear, commit to a blood oath, whatever— it isn’t real if it isn’t in writing. Written agreements clearly establish the responsibilities of each side of the transaction, with no uncertainties. If a dispute arises you have only to look at the agreement and let it tell you who’s supposed to do what, by when, and to/for whom. This applies equally to clients, partners, vendors—even your spouse if it ever comes down to it.

2. Read the Agreement

A very good rule of thumb in relationships is to ask before you accuse. In you feel an individual has wronged you and you have a written agreement, all you have to do is read it to see if they’re in or out of compliance. Always research the situation before pointing fingers, and the best place to start is with the contract.

3. Maintain Open Communication.

Most lawsuits stem from disappointment. Somebody was expecting something to happen that didn’t happen and now they’re upset. Meanwhile, if the party from whom they were expecting the action had maintained continual communication and managed their expectations, the disappointment would have been less acute. Keeping people informed every step of the way minimizes issues.

4. Own the Problem

When you see something’s about to go sideways, do something before it gets off the rails. It’s much better to head a problem off and try to put a solution in place than do nothing and try to fix it after the fact.

5. Consider the Other Party’s Perspective

If you can figure out what the other side is really after, you’ll have a shot at negotiating a solution you can live with, as opposed to having a crippling one forced upon you. People respect this effort. They also appreciate you trying to understand where they’re coming from and acting accordingly

6. Who Are These People?

Be careful with whom you choose to do business. Do your due diligence. Do they have a reputation for being difficult? Have they been known to sue at the drop of a hat? How badly do you need their business? If the signs are there and you ignore them just to get to a payday, well, you pretty much did it to yourself.

Living up to your promises can help you avoid business lawsuits, but you also have to make sure the deal is clearly defined from the outset and that the people with whom you’re working have realistic expectations.

With that said, sometimes nothing you do will suffice. That’s when a good small business insurance provider will come in handy. Find affordable coverage with minimal effort today using CoverHound.