Having a lawsuit filed against your business is most business owner’s worst nightmare. Even if things go the way you want, and your business ends up winning, lawsuits tend to take up a lot of time, energy, and resources. Of course, if things don’t go as planned, the results could be catastrophic. Yet many businesses don’t think about the reality of their actions or the fact that they could result in lawsuits. Many businesses tend to view lawsuits as something that happens to other businesses, not to them. That’s what this post is for; to inform businesses of what they need to know about lawsuits and why they should avoid them.
When can someone file a lawsuit against you?
There are so many different types of lawsuits, and if someone has solid grounds to file a claim, they can do it for basically anything. They can say that your business didn’t deliver what it promised to, they can file a personal injury lawsuit, a harassment lawsuit, or a discrimination lawsuit. Employees may also claim that they were unfairly dismissed, and there have even been lawsuits filed for a hostile work environment. So, now you see why it’s so important for businesses to protect themselves in an attempt to prevent lawsuits at all costs.
What are the financial implications?
Look, if someone does file a lawsuit against your business, it’s vital to get a lawyer. If you try and face the charges yourself, you’re likely to fail. That being said, lawyers are very expensive, and most businesses don’t have the income to include the money for a lawsuit in their budget, meaning it is often an unexpected expense. Of course, it’s also important to note that if the party wins the lawsuit, your business may need to pay them damages, and this is often a large sum of money.
What does it do to your business reputation?
The saying “all press is good press” is not always true when it comes to lawsuits. If word gets out that your business is involved in a lawsuit, it could be really bad for your reputation. While some big companies may have the finances and resources available to try and manage this press and recover their reputation, a lawsuit can be detrimental to a small business trying to get to the next level. Your business may lose a lot of customers due to a bad reputation.
What are the consequences?
As mentioned, the biggest consequence of a lawsuit being filed against your business is the fact that your finances and reputation will both be affected negatively. But there are also other consequences to keep in mind. As mentioned, you may lose customers. That’s not all – business partners and investors may decide to withdraw their funding for fear of their image being tarnished due to association with your business. Of course, there is always the very scary reality that your business may not survive this lawsuit. The expenses may just become too much, meaning your only option is to liquidate.
