At some point all companies and their founders are sued. There are a variety of reasons why these lawsuits happen. Unfortunately, not all of those lawsuits can be avoided—even with the best practices. The best course of action for any business owner is to create a strong defensible position and to understand their risks. The following are some of the most common lawsuits that small businesses face and tips on how to avoid them:
Relationships can sour even when a business flourishes. The ability to bring a lawsuit and the reasons for bringing them can vary dramatically. The following are some examples of such in-fighting and insights on how the owners could have avoided the situation:
Regulations can only go so far in preventing disputes in the employment context and sometimes spur litigation. In 2015 for example, the Equal Employment Opportunity Commission (“EEOC”) reported 89,385 individual charge filings. While individuals often file charges for multiple types of discrimination, that number is actually lower than the enumerated types of discrimination taken together. Here are some examples of large discrimination settlements.
The moral here is that every company should have clear policies surrounding equal employment opportunities and fair practices. Fairness is difficult to measure in business and compliance is often only the beginning. Companies must also implement measures to hold people accountable and promote a culture of openness so that people can step forward when things are not right.
Agreements often result in conflict when expectations are not met. Reasons for a deal falling apart can range dramatically including things like failing to deliver, non-payment, to issues of timing. The way the agreement is construed by the court may also depend on the circumstances. For example, here are some contract disputes that provide lessons for every business:
About the Author
Dan Spicer is a third-year law student at Mitchell|Hamline School of Law in St. Paul Minnesota. He is currently an extern at Loop Legal in Minneapolis—a firm specializing in business law. Dan has experience in arbitration, intellectual property, and legal research/writing through his current work at National Arbitration Forum. In his spare time, Dan likes to spend time outdoors with his wife and beagle. You can view Dan’s LinkedIn® profile.