Have You Been Sued? If Not, it May Just be a Matter of When
I hate to start off on a negative foot, but statistically, if you own a business, there is a one in three chance that you will either be sued or threatened with a lawsuit.
Odds for being sued are only increasing. According to the Bolt Agency, the annual price tag for small business legal issues totals over 100 billion per year. I felt like I should have underlined, italicized and even bolded that word…Billion. And if you think you’re small potatoes, or even more like Tator tots, compared to other companies and therefore are not a big target…think again. More than half of those businesses dealing with legal issues have revenue of under a million. Tator tots, beware.
I’m writing this story from my own personal perspective, having dealt with this very issue recently. Before my experience, I saw big, bold company logos splashed everywhere, including large trucks, and thought that billboard on the side of that eighteen wheeler is a moving target waiting for someone to claim the driver damaged their bumper and now they can’t work for the rest of their life. I steered clear of any big, splashy company vehicles or magazine ads that would announce to the local world that my business was making money hand over fist and there was a secret stash for those who wanted a piece. After all, whether you are guilty or innocent, getting sued is the “Price of Business.”
After two years of dealing with a legal matter in which I was not responsible, I still lost. My insurance company decided to settle because it was cheaper to give the plaintiff a few thousand dollars than the potential cost of attorney and court fees to prove this was a merit-less lawsuit. It seems that certain law firms will pursue any legal claim simply because they are going to profit from it whether right or wrong. From a business perspective, it makes financial sense to give an unscrupulous lawyer some financial compensation and then spend over two hundred dollars per hour in defense lawyer fees with no guarantee of winning the case. And that right there, is why our legal expenses have reached the Billions.
I’m going to put in my disclaimer now. This, in no way, is sound legal advice. It’s just my experiences and take what you will with that. I highly recommend getting advice from a reputable attorney about any company concerns.
One area, with rising business lawsuits are employment issues such as harassment and discrimination. Many larger firms have their own Human Resources (HR) department that are equipped to deal with these matters. If you employ other people and don’t have the luxury of a built in HR team, it’s recommended to consult a Human Resources expert on your hiring and employment practices. For example, something as simple as asking basic questions when conducting an interview can get you in legal hot water. Have you ever been arrested? Are you married? Do you have children? Do you drink socially? How long have you been working? Any of these questions can be construed as discrimination. As a manager, I know I’ve asked a couple of those questions when interviewing and it was simply me trying to be social and relate to the prospective associate. Back then, I never would have guessed my company could get sued for discrimination because someone made a comment about my desk pictures and I, in turn, asked about their family.
One question I think all business owners should ask a prospective employee is, “Have you ever sued a former employer?” However, this may not be a legal question so make sure you consult your attorney or HR expert before asking. I found it fascinating in my recent lawsuit experience that the plaintiff had sued two former employers. This is just something to consider when hiring.
In addition to making sure you do everything possible to create a safe working environment for your employees and clients, it is important to make sure you have the necessary insurance umbrella. Good liability insurance can mean the difference between losing everything — sparing you a significant amount of time, money, and stress. Insurance is one thing you don’t want to skimp on. Consulting your agent once a year is a good idea especially if your business has expanded or ventured into a different division which may not be covered under your current policy. For example, as far as the government is concerned, my business falls under the florist code. However my liability policy recognizes that I am also a landscaper due to the side projects my business handles seasonally. It’s very important your agent understands all aspects of your company and builds your insurance plan around them. You could find yourself in a very messy situation if you didn’t explain your company vehicles sometimes carry explosives and it blows up in the middle of rush hour.
My last bit of non-advice is get everything in writing. Contracts with clients, employees, policies and procedures, employee reprimands, accident reports, etc. Paperwork is the basis of a good defense and most attorneys seem much more confident if you can back your case with something in writing. Of course, this can sometimes come back to haunt you if something important was left out. You can protect yourself by having a lawyer look over your contracts for any flaws or possible loop holes.
I wish I could end this piece on a more positive note, but I don’t see our legal system getting any better financially. But I can positively say I no longer bitch about all those painful years of shelling out hundreds of dollars in liability payments. Believe me, it was a wise decision.
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