Reducing one’s exposure to litigation is never completely possible. Despite every measure that a business entity takes, it seems as if there is no shortage of lawsuit-happy plaintiffs ready to seek compensation. However, businesses can take certain practical, preventative measures to reduce their tort liability significantly.
The most crucial steps to take
Implementing a groundwork of proactive steps can go a long way toward reducing liability. And when it comes to business torts, an ounce of prevention is worth a pound of cure. Some of the fundamental precautions that all businesses should consider include:
- Regulatory compliance
Adhering to municipal, state and federal regulations ensures that potential litigants do not have grounds for a tort based on legal noncompliance. It is also important to stay abreast of any major developments in the law that might affect business operations.
- Accurate record-keeping
Documentation will be necessary to cover a company’s back when faced with a dispute. Staff should keep online records in safe, encrypted files and keep paper records in secure locations.
Incorporation provides a much-needed barrier between business liability and personal liability. If a party does file a lawsuit, the business owner or other individuals will not have to worry about losing their private assets.
- Careful contract drafting
When a legally sound contract is in place, it makes it much more difficult for a signatory to claim breach of contract. Having in-house or external counsel draft and review all employment, supplier, vendor and other contracts is a necessity, not an option.
Putting down a foundation of these and other measures can seem time-consuming and a drain on resources. Business torts, though, almost always drain even more time and money. Doing everything imaginable to minimize liability helps companies focus on their missions instead of on complex litigation.