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How Can My Small Business Avoid a Lawsuit?

Posted by Jonathan Krems | Dec 05, 2021 | 0 Comments

In today's Freedom Friday blog and email newsletter, I want to answer a question that I am NOT often asked, but I wish I were asked more often, and that question is, “How can my small business avoid a lawsuit?”  As a small business owner there are several different kinds of lawsuits that you may become subject to but can be avoided.  Many legal disputes can be avoided if a small business owner takes some steps at the beginning.  Here are three (3) types of lawsuits frequently faced by small business owners, and how to avoid them:

1.  Breach of Contract

The first type of lawsuit that is frequently faced by small business owners, but can be avoided, is a breach of contract dispute.  Breach of contract disputes are when one side or the other fails to hold up their end of the agreement.  This can be avoided first of all by getting the contract in writing.  How many times have you as a small business owner made an agreement with someone and it was NOT in writing, i.e. it was an oral agreement, maybe settled by a handshake?  Oral agreements almost always lead to misunderstandings or disagreements.  Maybe you have relied on a written contract, but you wrote the contract yourself (or perhaps you relied on a contract written by the other side themselves).  A few weeks ago in this blog I talked about why you should always have a “boilerplate” contract reviewed by an attorney.  Often times, these “boilerplate” contracts, or copycat contracts, are incomplete, fail to address every important issue in the transaction, overlook plans for contingencies, or provide other loopholes.  All of these problems can be avoided by having a business attorney draft the contract for you.  That is the best way to avoid a breach of contract lawsuit.

2.  Partner Disputes

The second type of lawsuit that is frequently faced by small business owners, but can be avoided, is a partner dispute.  Many small business owners have one or more business “partners” who assist with the management and ownership of the company.  However, “partnerships” come with responsibilities, and if one or more “partners” fail to carry their load or act out of self-interest, this can lead to a partner dispute lawsuit.  The best way to avoid a partner dispute is a well-written partnership agreement which outlines duties and responsibilities, along with the consequences of failure to meet such duties and responsibilities, and methods of dispute resolution.  If you as a small business owner can address and anticipate problems before they occur, not only can you avoid litigation, but you will improve your business relationships, as well.

3.  Employee Problems

The third type of lawsuit that is frequently faced by small business owners, but can be avoided, are employee problems.  As a small business owner there are many documents that can protect you and your business.  Clear and legally supported policies and procedures such as non-compete agreements, confidentiality agreements, harassment policies, social media policies, and other written policies and procedures are needed to protect your employees and your small business.  These policies and procedures communicate your expectations to your employees and provide them guidance as to how to proceed if a policy is violated.  Failing to have such policies and procedures, or not following them, can lead to a lawsuit.  The best way to avoid such a lawsuit would be to hire an attorney to draft your policies and procedures, along with specific employment or independent contractor agreements, which will address the needs of your small business within the bounds of the law.

At Liberty Legal Solutions, LLC, we offer contract review, drafting, and negotiation services.  Our contract review services start at $100/page; or for $97/month we can review any contracts you send to us, with a 12-month commitment as part of a Contract Review subscription plan.  Our contract drafting services start at $75/page.  We also offer flat fee contract negotiation services for $600, which is all inclusive.

If you are interested in starting a small business anywhere in Oklahoma, or you are interested in taking your small business to the next level, please contact me at [email protected] to schedule a FREE strategy session.

About the Author

Jonathan Krems

Jonathan is the Founder and Managing Attorney of Liberty Legal Solutions, LLC, a law firm dedicated to building, protecting, and defending the business and personal interests of our clients in Oklahoma.  Jonathan's primary practice areas are business law, contracts and agreements, business liti...

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