What are the chances my small business can get sued?

Starting a small business is a major financial endeavor, one that often places many new business owners in a vulnerable position money-wise. So, it’s only natural that one of the ultimate nightmares these small business owners face is getting sued. 

What are the chances of your small business can be sued, though? Is this an irrational fear or one you should be taking more seriously? This is everything you need to know about lawsuits, what they cost, and how you can protect yourself. 

Weighing the Odds

With roughly 40 million lawsuits filed in the United States every year, the possibility of anyone getting sued is very real. For small businesses, contract disputes are the most common filed suits making up 60% of 20 million civil cases each year. Other cases that could impact your business include:

• Tort
• Infringement
• Slip and fall
• Employment discrimination
• Wrongful death

While all of these can potentially impact your business, the reality of whether or not you’ll get sued is a matter of weighing your risks. A storefront, for instance, has more exposure than an online store. More employees and contracts also increase your risk. Consider how your business operates and what types of lawsuits it could be exposed to in day to day operations. 

The Cost of Court

With your risks calculated, it’s essential that you evaluate the next major impact to your small business. Lawsuits can cost an incredible amount of money. So, will your business be able to survive one? The answer, much like your risk of getting sued, is complex. 

The price of a lawsuit varies wildly depending on what happened, if the trial goes to court, and whether you win or lose. Once the type of suit is determined, you’ll also need to hire the right type of lawyer. You would need these Orange County trademark attorneys for any infringement cases, for instance.  

Court filing fees, discovery, and the trial itself all add up faster than you may think. The more complicated the case, the more you’ll end up shelling out even if the accusation against your business is false. Most small businesses can expect to pay between $54,000 and $91,000 in most lawsuits. 

Protecting Yourself from Lawsuits

Before you find yourself chomping at the bit to hire business litigation lawyers, there are a few steps you can take to better protect yourself. The first is to incorporate your business. An LLC helps limit liability by creating a separate legal entity for your business, keeping your personal assets out of the case. 

Second, consider an alternate dispute resolution (ADR). Mediation and arbitration are viable ways to resolve disputes without the cost of a trial. As long as both parties agree, you can settle issues while saving yourself and the other party money. 

Finally, make sure you keep excellent records. Each document, no matter how small, has the potential to prove you did nothing wrong in a court of law. In some cases, proper documentation could stop the case from going to trial altogether when you’re in the clear.