Managing a successful startup can be difficult, especially when you’re facing the possibility of being sued. While a more established company might be able to absorb the negative financial impact that a lawsuit creates, newer startups could be put out of business by even a small litigation event. Thus, it’s imperative for a startup owner to protect their company from lawsuits that could damage their reputation and finances significantly. With that said, here are seven steps you can take to reduce the likelihood of being sued:
1. Post a Legal Disclaimer
Having a well-worded legal disclaimer posted on your website is perhaps the best way to keep someone from suing you because it takes care of any potential liabilities at the beginning of the business relationship. Essentially, you usually can’t be sued for a liability that was covered within your disclaimer, so covering all the bases in this brief legal text is one of the best ways to safeguard your startup from lawsuits.
2. Educate Employees
Since your company can be sued for the actions of its employees, hiring the right people and educating them extensively is imperative. After all, you don’t want to wind up in court over something that could have been prevented if you had invested in employee education. Additionally, it’s wise to implement employee performance monitoring so that your managerial staff can oversee operations and prevent actions that could result in a lawsuit.
3. Consider Keeping Help Close by
It’s good to have a team of solicitors on standby in case you need quick advice on dealing with someone who is threatening to sue. A good solicitor may be able to help you avoid the lawsuit altogether or assist in the development of a defence strategy that will ensure you don’t lose in court. Having a firm already on-call ensures that you have legal advice and assistance ready when you need it. Some providers can offer benefits that can make them good options, hjsolicitors.co.uk offer different pricing models including monthly subscriptions on legal advice. This could be great to secure that quick advice in your time of need.
4. Create a Complaint System
In most cases, the person who is suing you will complain about their problem at least once before they resort to taking it to court. While it may seem like nothing can be done in retrospect, it’s often possible to rectify the matter with the right response. Having an effective complaint system in place will ensure that a disgruntled client or supplier can quickly reach an authoritative figure in the company and have their matter addressed properly before it elevates to the point of becoming a lawsuit in the making.
5. Have Clear Terms & Conditions
Similar to a disclaimer, your terms & conditions set the tone of your working relationship with all parties that you do business with. It’s a good idea to post a detailed terms & conditions page on your website and include it as fine print along with your disclaimer in any contractual agreement that you enter into. Likewise, if you sell products, you should clearly post your terms & conditions along with a disclaimer on receipts, packaging, or invoicing materials.
6. Commit to Realistic Expectations
Threats to sue can arise when you fail to deliver on your end of the bargain, as the disgruntled party then feels they have the right to obtain compensation for your shortcomings. The answer to this problem is that you shouldn’t put your company in a position to fall short on its promises. Performance issues don’t usually result in lawsuits, but they can if the issue causes a substantial loss for the person who is threatening to sue.
7. Try to Solve Problems Without Litigation
It’s often possible to settle out of court by offering the right kind of compensation to the person or company who is threatening to sue. While this might seem like an unappealing option in comparison to paying them nothing, offering free products or services may be a preferable route compared to enduring a lawsuit. Settling out of court is usually the best path to take when you believe the claim won’t be dismissed by the courts.
Why Startups Can’t Afford to Deal with Lawsuits
In closing, startups are particularly vulnerable to lawsuits because they’re typically not as financially stable as more established companies, so there’s really no room for error when it comes to preventing lawsuits in the early phases of a startup’s growth. Many startups would wind up going under after losing a lawsuit, so it only makes sense to implement precautions that can prevent that from happening. By heeding the advice in this guide, you can eliminate the cause of most lawsuits and put your startup in a position to defend itself successfully.