A gavel next to some open law books including one on business litigation
Published on September 17, 2019 by Cipparone & Cipparone PA

Whether you win or lose, business litigation can have a major impact on your business. Litigation is expensive, has high time cost and can sap the energy that should be used to run your business. Most attorneys will advise to prevent business litigation  if at all possible. While you shouldn’t step away from a necessary fight, there are a few simple ways to protect your business from future litigation.

Choose the Right Business Structure

Doing business as a sole proprietor or using an informal partnership can leave your business and even your personal assets vulnerable to litigation. Instead, think about setting up your business as a Limited Liability Company (LLC).

LLC’s combine the features of partnerships and those of a corporation so that your personal assets are kept separate from potential legal issues of the business.

Subchapter S corporations are also a good choice depending on your desired tax treatment.

“Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the monetary winner is often really the loser — in fees, expenses, and waste of time. As a peacemaker, the lawyer has a superior opportunity of being a good man. There will still be business enough.” ~ Abraham Lincoln

Always Have Written Contracts

Putting your business contracts in writing and having a business attorney review them is a simple yet crucial way to keep yourself protected from unwanted litigation.

Consider non-disclosure agreements (NDA’s) and/or non-competition agreements for your key employees. You can even have your employees sign contracts that require that disputes that arise must be resolved through alternative means to litigation.

Make Sure Your Insurance is Appropriate for Your Business Risks

The type of insurance you purchase for your business could have a major impact on the liability that you have as an owner. General Liability and commercial property insurance are the minimum. It would also be helpful to have product and professional liability insurance.

Worker’s compensation might also be needed. Be sure to discuss these needs with your attorney to find the right types of insurance that will fully protect your business.

Train Well, Train Often and Keep Good Records

Training your employees and partners regularly on sexual harassment, social media standards, bullying, safety and other relevant policies can dramatically reduce the potential for legal issues in the future. Develop an employee handbook that fully outlines the policies and procedures of your business and terminate any employees that aren’t up to standards.

Disputes can come up at any time for a number of reasons. As long as you keep organized records, digging up relevant information to resolve disputes will be much easier. Take notes on any relevant conversations and review your record-keeping system to assure that you are protected. It’s best to keep both electronic and hard copies.

Consult an Attorney

Each business is different. Depending on your specific industry, business model and unique needs, it is best to discuss your liability with an attorney that can prescribe a roadmap for protection. You can’t protect yourself from everything, but preparing can put you and your business in a much better position when a legal issue arises.

The law offices of Cipparone and Cipparone have been providing business legal services in Central Florida for many years. If you are in need of business law services or are currently involved in a business dispute, please contact us now.

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**This blog is for general informational purposes only. Cipparone & Cipparone, P.A. does not distribute legal advice through this blog. As such, this blog does not constitute legal or other professional advice, and no attorney-client relationship is created between the reader and Cipparone & Cipparone, P.A.

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