Sunday, May 26th 2019


In business, one of the many setbacks can be lawsuits from a variety of sources. Not only could a judgement seriously impair the ability of a company to survive but the process of court can tie up valuable capital and key personnel of the business, jeopardizing it further.

There are many areas that business can be exposed to lawsuits. Here are a few:

1. Claims from Employees: The biggest expense in operating a business is also the largest expense in courts. Workplace injury, discrimination, sexual discrimination, oppressive environment and the like can easily ruin a business. The best way to avoid it is to control the workplace environment tightly and to do the upfront checks on potential employees before they are hired. Once they are hired, they are your problem and their claims need to be documented and handled or you will end up in court. Workplace injury risk is often transferred (by mandate) to an insurance company through Workman's Compensation insurance.

2. Claims from Clients: Users of the products or serrvices that your business sells may also be a source of lawsuits. If you sell a product that is faulty it may cause injury and will make you liable to lawsuits. The only way to prevent valid claims is through quality control at the production level. If you outsource production, then you must still oversee the product because if their is an injury, your business will be liable. On the service side, this mainly relates to services that could end in injury. Medical services are the most common and also the most expensive to insure against. Patients who do not get the desired results from a procedure often seek compensation in court. The cost of malpractice insurance is so high that it definitely contributes to the cost of medicine through the system.

3. Claims from Competitors: There are various forms of lawsuits you might be exposed to from your competitors. These include patent infringement, stealing their ideas, engaging in monopolistic pratices, and collusion. Since these are largely ethical in nature there is no insurance to offset their risk but good counsel and common sense can prevent them.


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