Settle That Case!
Lawsuits Are a Cost of Doing Business
When you start a business, you must understand there is a risk you will get sued as a result of the business’s operations. Whether it’s a vendor suing because you haven’t paid an invoice, an employee suing for wrongful discharge, a customer suing because your product or service injured them (economically or physically), or a patron slipped and fell on your premises, the risks are all around you.
While there are ways to minimize this risk, eliminating it is impossible. So, account for it when you do your business planning.
Rule #1: Buy insurance!
Partner with an experienced insurance broker who intimately understands your business. This will ensure that your insurance policy covers all the high risk areas of your business.
Rule #2: Understand the business decisions that arise when you are being sued.
Example: I represented a client who was being sued by a patron of his business. In my opinion, the patron had an extremely weak case against my client. The patron sought a settlement offer and I recommended my client take it. Why? Because the settlement amount on the table was less than the overall cost of proving in court that the patron had no case against my client. My client was emotionally reluctant to ‘give in’ to the patron and his frivolous lawsuit, but the business decision was fairly simple: pay more in legal fees to defend his case, or pay less to the patron to go away. Distasteful? Yes, but there are costs to doing business, this is just one of them. Note: if my client had followed Rule #1 Buy Insurance!, he wouldn’t have needed to go through this experience.
Rule #3: This is America, you can be sued by anyone for almost anything… and defending a lawsuit is expensive!
Understand the difference between, “Can I be sued for X?” and “Am I liable for X?” While it is fairly easy for a person to sue you or your business, whether or not that person suing you will be awarded a judgment in a court of law is an entirely different question. But you must understand the business implications of these concepts. In my example above, my client was sued on very weak legal grounds, but I will reemphasize, this is America, you can be sued by anyone for almost anything. My client had a strong legal case, but litigation is expensive and asserting that legal case was much more costly compared to settling with the other party.
Rule #4: Buy insurance!
Before your business does get sued, make sure your insurance company will cover the bill.
Comments on this entry are closed.