Prevent Lawsuits

The total annual cost of the tort system to U.S. businesses (large and small) is $129 billion per year.  Small businesses with $10 million or less in revenue bear 68 percent of that cost. That equates to about $150,000 a year for each small business – money that could be used to hire additional employees, expand operations or improve health coverage.  This data is according to a study conducted by NERA Economic Consulting.

Preventative actions can help to curtail lawsuits.   The following article outlines some steps to take to avoid lawsuits and to reduce litigation expenses:

Get it in writing

Obtain contracts and agreements with vendors, customers, etc. in writing so that there is no misunderstanding as to the obligations of the parties.  Also obtaining information about the customer can make it easier to trace and make demand upon a customer should the party fail to pay or breach the agreement.

“Matters of small concern should be treated seriously” –Yamamoto Tsunetomo

Even a legendary samurai knows that a pesky, annoying customer complaint should be attended to immediately lest it becomes a consumer demand letter followed by a lawsuit seeking double and/or treble damages and attorney fees.

Are you covered?

Small businesses should carry appropriate general liability insurance.  However, many businesses are unfamiliar with Employee Practices Liability insurance.  It provides protection against employees, former employees, and even employees not yet hired.  In sum, it typically covers discrimination, sexual harassment, and other employment law related issues.  Discuss with your insurance company so that you understand what is covered in your policy.  In addition, training and educating employees on sexual harassment and safety practices can reduce lawsuits as well.  When violations occur, take appropriate and immediate steps to cure any issues, including discussing the matter with legal counsel.


Are your employees washing their hands before they return to work?  Is the access to your business complying with the Americans with Disabilities Act?  Are you placing up proper signage warning the public when there is a wet floor?

Failure to comply with state and federal laws can lead to fines, lawsuits, and other issues.

Are you incorporated?

Forming a corporation generally protects the assets of individuals.  In other words, if there is a lawsuit, your personal property would not be able to be levied, etc.  However exceptions do exist.  Talk to a lawyer and accountant (to discuss tax consequences and savings) to determine whether it would make sense to incorporate.

Copyright © 2013 Kyle R. Guelcher – All Rights Reserved. NOTICE: The materials contained in this website are provided for general information purposes only and do not constitute legal or other professional advice. The materials on this site may be considered advertising under the rules of the Supreme Judicial Court of Massachusetts. Viewing this website or blog, requesting information, or contact by an attorney or associated attorney of the firm does not create an attorney-client relationship. You are advised to speak with a licensed attorney in your jurisdiction.

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