How to effectively manage the risk of being sued for your business

Minimising risk is critical for any business owner. So how does one go about limiting the possibility of being sued, and what steps can be taken to deal with claims if they cannot be nipped in the bud?

In this article, Freeths’ Richard Coates takes a look at the actions which you can take today to minimise litigation risk and ensure that your business continues to run as smoothly as possible.

Limiting the possibility of being sued

One of the key steps in limiting litigation risk is to take care in choosing who your business deals with, be it suppliers, customers or middle-men. It is easy to just “crack on” safe in the knowledge that your business’ own ethical approach cannot be challenged. However, dealing with those who do not share your business’ approach increases the risk that you will be subject to unscrupulous claims.

Sometimes, these claims will have no basis at all. It is not unheard of for reputable and well-known businesses to be sued partly because of their good names. Claimants know that these businesses will be forced to entertain such claims to avoid negative publicity and wasted management time. Often, it can be easier for these businesses to seek an early settlement rather than to fight it ou through the Courts.

Unusually, two well-known businesses in their respective industries have recently fought unscrupulous claims through the Courts. In both cases, the Claimants withdrew their claims just after the trials started and were ordered to pay the Defendant businesses’ legal costs at an increased rate. These cases should provide greater confidence to businesses in challenging claims which do not have any basis.

Richard Coates

Alongside taking care with who your business deals with, it is important to proactively deal with litigation risk from an early stage rather than after a claim has been issued. For this, businesses should look to engage a competent lawyer at the first signs of a dispute. This will often assist in understanding the legal position against the commercial backdrop within which your business operates, and in many cases will help to bring an end to a dispute before it has even been issued at the Court.

If your business is facing issues addressed by this article, please contact Richard Coates (richard.coates@freeths.co.uk and 0845 128 7972).