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Small businesses are vulnerable to many types of lawsuits

Running your own business means watching every dime. The success of your business is your personal victory, and you have likely staked your livelihood, your future and your reputation on its success. This is why, in addition to protecting your bottom line, you want to protect your business from lawsuits.

While you may feel you have that threat under control with careful compliance and due diligence, the possibility that someone will file a claim against your company is very real and dangerous to ignore. More companies face lawsuits than ever before, and some of them don't survive.

Common reasons for lawsuits

Undoubtedly, your business involves some form of contract. Whether your employees sign non-compete or privacy contracts, or your clients and vendors agree to specific terms, contracts can be your protection or your downfall. You can avoid contract litigation by developing strong legal documents and enforcing them consistently.

Your business may unexpectedly find itself in a legal battle for the violation of someone else's intellectual property rights. This may be the unintentional use of a competitor's logo or the sharing of an image or copyrighted text on your company's social media page. If you have any doubts about the ownership of something you want to use in marketing your company, advisors recommend letting it go and taking a different course of action.

Dealing with employees

One of the most common lawsuits small businesses face involves unhappy employees. In fact, you may even face a lawsuit from someone whom you did not hire to work for you if that person feels you passed over hiring him or her for some discriminatory reason.

The workplace is a delicate balance of personalities, and harassment or the perception of harassment among your workers may bring a legal claim down on your shoulders. You may also find yourself on the defensive for terminating an employee if there is evidence that the firing was unlawful. The best advice is to set the tone for your employees by speaking carefully and respectfully at all times, and to keep scrupulous documentation of employee performance and behavior.

Protecting yourself

There are numerous ways to protect yourself and your business from the damage a lawsuit can do. Purchasing the appropriate insurance will help cover you in the event a successful claim is filed against you. You may also consider forming a limited liability company, which can help protect your personal assets from certain civil actions.

Having a legal advisor for every aspect of your business is also an excellent way to minimize the risk of a lawsuit or the consequences of legal claims. An attorney can advise you on employment issues, contracts and other aspects of business law as well as fighting for you from the earliest stages of a lawsuit.

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Chodos & Associates
1880 Century Park East
Suite 615
Los Angeles, CA 90067

Toll Free: 866-986-7255
Phone: 310-598-3405
Fax: 310-203-3866
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