4 Types of Business Lawsuits That Can Devastate Your Small Business

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4 Types of Business Lawsuits That Can Devastate Your Small Business

The financial impact of business lawsuits can be much more damaging to a small business than a large company, which often has in-house legal counsel and a budget solely dedicated to legal defense. The cost of litigation for a small business can range from $3,000 to $150,000, according to the Small Business Association. If it’s on the high end, this could put a lot of small businesses out of business.

Litigation costs U.S. small businesses more than $100 billion every year. In fact, half of all civil lawsuits are filed against small businesses. Some types of litigation are more costly than others, including these four:

Employment. Employee lawsuits are one of the most prevalent sources of business litigation, so taking steps to avoid these types of claims can save you significant time and money. Employees are protected by a number of state and federal workplace laws and can file suit for a number of things, including unlawful termination, discrimination, hostile work environment, wage issues, overtime issues, unemployment compensation, and more.

Contractual. Contracts are an integral part of doing business, but there are times when parties simply do not live up to their responsibilities under a legally binding agreement. Whatever the case may be, breach of contract lawsuits can be complex and may end up in court for resolution. To avoid having to defend yourself in a contract dispute, you need to be sure your contracts are drafted appropriately, that agreements are always put in writing, and that you abide by all the terms of your legal agreements to avoid being sued for failure to perform.

Intellectual property. Violations of intellectual property rights can be extremely costly as you could be held accountable for lost profits as well as damages. If the infringement was found to be willful — when a party exhibits intentional disregard for the owner’s rights and continues to infringe even after notice is served — the court can treble the damages. The best way to avoid this is to have a process in place for training personnel and policing any unauthorized usage of another owner’s intellectual property.

Customers. Consumer lawsuits over defective products, false claims, fraud, or other prohibited activities are serious and could lead to large damages, harming not only a company’s bottom line but its reputation as well. While it is preferable to try to resolve these disputes informally, these matters often result in litigation.

When you are facing any type of business dispute, you need an experienced Arizona trial attorney to obtain the best possible result. Contact Williams Mestaz, L.L.P., at (602) 256-9400 to speak with us about your case.

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