Over the course of your business, you are likely to face a lawsuit. Whether it be from employees, other companies or everyday clients, lawsuits affect one in three small businesses, reports Bolt Insurance Agency. Among the consequences are high costs, a damaged reputation and lost productivity.
These negative side effects are enough to want to avoid litigation. While it is smart and possible to do so with the help of your attorney, you cannot prevent all lawsuits from occurring. You can, however, use them as learning opportunities to find areas of weakness and improve your business practices.
Discover the cause
Whether you resolve the matter out of court or lose the trial, getting to the root of the issue is necessary in keeping the problem from happening again. Common causes of litigation include:
- Unclear contracts
- Poor record keeping
- Insufficient employee training
- Lack of relevant policies and procedures
- Noncompliance with the law
Once you are aware of the cause, you can make changes with the help of your lawyer to reduce the chances of future lawsuits.
Review your action
You should also review how you responded to the problem. Should you have handled the original interaction better, whether it was accusations of workplace harassment or a customer complaint? Could you have done something differently to have been successful in dispute resolution or litigation? Did you lack proper evidence for your case due to poor documentation? Looking at your role in the experience can help prevent future problems and help you know how to respond if it does reoccur.
Protect your company
Perhaps the financial consequences of litigation have opened your eyes to the importance of insurance. Make sure you have the right kind of coverage for your business and enough of it. In addition, invest in high-quality accounting, HR and legal services for the most effective prevention. Make the time and money spent worth it by learning from your mistakes.