Are you worried that your business might be sued? Do you know what to do if that happens? Being involved in a lawsuit can be expensive, time-consuming, and emotionally draining, especially for small business owners.
You won’t have a team of Ivy League lawyers to represent you like a Fortune 500 company, and the thought of fighting a lengthy legal battle can be a bit overwhelming.
However, there are many ways to protect your business. Here are some things you can do in the event of a lawsuit.
1) Understanding Criminal vs Civil Lawsuits
The two main kinds of lawsuits are civil and criminal. These aren’t mutually exclusive, but you must know which one will be on the case before you call someone to represent you.
Civil lawsuits are typically associated with small businesses. There are a lot of them, so it’s easier to defend them. If you win your case in court, your company gets to keep the winnings or get their money back. A civil lawsuit can be settled or it can go to court. If the case goes to court, you’ll be forced to pay a fee to represent yourself in court. This will eat up any potential profits or winnings you’d get. So, you’ll probably want to avoid this if you can.
By contrast, criminal lawsuits are generally associated with larger businesses and professional organizations. If you lose your case, it could result in fines, probation, or even jail time for the person or people who sued you. Most people know that your reputation and standing in the community are important to any business.
2) Check Your Insurance Coverage
Insurance is extremely important for small businesses. Because of the potential for legal issues, many insurance carriers provide special insurance for small businesses.
Fortunately, most insurance plans include one or more plans designed specifically for businesses like yours. Make sure you check your existing insurance policies and see if you have any additional plans for your business.
You also want to make sure that the policy covers all the elements you might want covered. For example, are you in a lawsuit right now? The insurance plan should provide coverage for that situation.
3) Know the Difference between a Lawsuit and a Claim
Claim and lawsuit are sometimes used interchangeably in an informal setting, but they really mean different things. A claim means that the plaintiff, or plaintiff’s attorney, is requesting money for their grievance – but if settled, there’s no reason to proceed to court.
A lawsuit is when a claim is not settled, and the plaintiff will take you to court. You’re on the defense. Lawsuits can be costly for both parties, but the losing party may end up being ordered to pay restitution or their attorney’s fees. This can be devastating for a small business.
4) Understand if you’re the victim of patent trolling.
Patent trolls are a real risk that every small business should consider. Patent trolls are essentially organizations that buy up patents to seemingly vague patents, and threaten you with infringement lawsuits.
Patent trolls are very difficult to deal with. They have a vested interest in making the litigation costly and distracting for the other side. If you’re not experienced with dealing with patent trolls, you’ll want to avoid them at all costs.
Many companies simply choose to settle with patent trolls out of court, simply to make them go away, but this has the consequence of emboldening more patent trolls to sue more companies.
5) Find a reputable business attorney.
It’s very important that you select an attorney who understands what your business is and how it’s organized. While any attorney can handle a personal injury case, it’s usually best to select an attorney who specializes in a certain area.
Maybe you need an attorney for intellectual property issues, or for sales disputes, or to defend your product or patent. Make sure you choose an attorney who is knowledgeable about your business and what it needs.
If a claim against your business goes to court, your attorney will represent you in court. It’s very important that you trust your attorney, and listen to their advice regarding the case, and the best way to handle the situation. Your attorney should have a long track record of winning the cases they’ve been involved in.
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