Running a business is no easy task. From contract disputes to employment issues, businesses face the risk of lawsuits every day. No matter how diligent you are in your affairs, litigation is often an inevitable reality of today’s corporate climate.
Hiring an experienced business litigation attorney to handle your legal issues when they arise and advise you on mitigating your risks will allow you to concentrate on the things that really matter, like running your business. The following are some tips for mitigating risks that will make your life easier when you find yourself facing a lawsuit.
- Question Jurisdiction: No lawsuit can go forward unless the party bringing suit against you can show that the court has personal jurisdiction over the parties. When corporations are involved, jurisdiction can be complicated. Oftentimes you will be facing a lawsuit in a state where you don’t have an office or conduct much business. The courts have special rules for determining whether a company has sufficient contacts with a jurisdiction to justify having to defend a lawsuit there. Recent rulings have narrowed the test for finding jurisdiction over a corporation when a claim does not arise out the corporation’s contacts with the jurisdiction (this is called “general jurisdiction” as opposed to “specific jurisdiction”), holding that a company’s contacts with a state must be so “constant and pervasive” as to render it “essentially at home” there. If you’re facing a suit in a state where your company is not incorporated or headquartered, you might have a basis to argue that you should not be subject to personal jurisdiction, because your business activities, such as having employees or satellite offices in the state, are not enough to make you “essentially at home” in that state.
- Document Your Negotiations: Negotiations play a crucial part in any business. From company formation to later disputes over profit sharing or partnership, it’s critical that every agreement be memorialized in writing. This is especially important for start-ups, where excitement about launching your new venture may make you want to skip the time-consuming legal formalities. No matter how good the parties’ intentions are at the time, a handshake deal will only lead to conflict down the road. Insisting that all agreements be in writing will protect you later on when you’re facing a breach of contract claim. Once you have your agreements in writing, it’s just as important to implement an organized system for maintaining company records in the event that you need to access them later.
- Put Your Policies In Writing: As with negotiations and agreements, it’s critical to put all company employment policies and procedures in writing. Usually this takes the form of an employment manual or company handbook. Having written policies is the best way to reduce the business risk of employee actions for things such as wage violations, wrongful termination, or discrimination. The written policies must be accompanied by employee training, and must be updated as necessary. Your attorney can ensure that your policies comply with state and federal laws.
- Conduct Background Checks: Pre-employment background checks are one of the easiest ways to safeguard against hiring employees who will expose you to liability or losses down the line. However, very few companies do them. While a background check isn’t foolproof, it may go a long way toward weeding out potential hires who can pose a threat to both your assets and your company’s reputation. An attorney can assist you in obtaining the proper releases necessary for conducting these critical checks.
Hiring An Experienced Attorney Matters
Litigation is an expensive proposition for any business. The best way to avoid huge litigation costs is to take the proper steps to avoid litigation in the first place. Hiring an experienced business litigation attorney will not only help you when you’re facing the unfortunate reality of a lawsuit; your lawyer will also be there every step of the way to ensure that you’re taking the proper actions to avoid unnecessary conflict down the road.
Every lawsuit offers lessons for mitigating risk in the future. At the Law Offices of Andrew Ritholz, we are experienced in helping businesses throughout Southern California identify potential business risks and structure their operations and practices in order to best avoid those risks later on. If your business is currently facing a lawsuit, or if you have concerns about potential risks to your company, contact us today. For a free consultation with a Pasadena business litigation attorney, complete the form to the right or call (877) 261-9322.