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How to Protect Your Business from Litigation

Posted by M. Margaret Gonsalves-Sabola | Jun 01, 2018 | 0 Comments

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Although no business is truly judgment proof, you can take steps to protect your business from litigation. Staying out of court involves balancing risk. There will always be some risk of having a lawsuit filed against the business, but you can take practical and legal steps to mitigate your risk.

Choose Your Partners Wisely

If you are starting a business with a partner or several partners, do your due diligence first. Investigate and ask questions about their ability to pay should the business go under, their past employment or investments, and their plans for the business's future. The same is true for potential investors – look into the sources of their cash. This avoids surprises such as a partner on the brink of bankruptcy or an investor known for his illegal side deals.

If you are choosing suppliers and purchasers or renting office space, do a similar investigation. Ask your network or employees at your business what they know about a company, read its financial reports if available, and search for the company online. Build a relationship of trust with other companies so that if things go wrong, you can work out an amicable resolution instead of resorting to the courts.

Keep Records and Sign Contracts

A firm handshake and a smile are no longer enough to protect your business from litigation. Keep records of your transactions and sign written contracts for all business agreements. Use your contracts to avoid litigation: be very clear about what is expected of you under the agreement and what you expect in return. Make sure to specify what happens if the other party does not meet its obligations. For example, you may want to speak to an attorney about drafting a standard arbitration/mediation provision to include in all of your contracts. This provision would require a party with a dispute against your business to resolve the dispute using private arbitration/mediation rather than going to the courts.

Manage Your Employees

Appropriate management of employees can help avoid litigation. Be aware of Bahamian employment laws or have a designated person in your company ensure compliance. Have a plan in place for termination of an employee to avoid potential lawsuits.

To find out more about commercial litigation, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.

About the Author

M. Margaret Gonsalves-Sabola

M. Margaret Gonsalves-Sabola is a civil and commercial litigation attorney and an accredited civil and commercial mediator. Margaret has over 21 years' experience in legal practice in the United Kingdom, Jamaica and The Bahamas.

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