Protect your business from a customer lawsuit

Operating a customer-facing business has many benefits, allowing you to create unique relationships with the people you provide services to. Unfortunately, those relationships bring the risk of customer lawsuits. Thankfully, there are many ways to reduce the risk, from how you set up your business to how you respond after a lawsuit runs its course.Whether you are just getting started or have faced a series of lawsuits and want to know how to course correct, the experienced business attorneys at BrewerLong PLLC can help. We listen attentively to your needs before creating a clear, effective plan to address your issues. Contact us today to speak with an experienced business attorney!

Why Customers Sue

 Common claims customers make against businesses include:

  • Breach of contract;
  • False advertising;
  • Harassment, retaliation, or discrimination;
  • Products liability;
  • Premises liability; and
  • General negligence.

Knowing common legal claims you may face can help you avoid the pitfalls that give rise to those claims through proactive business management.

Setting Up Your Business

You can minimize customer lawsuit risks right away. From how you structure your business to what policies you and your employees adhere to, you can be proactive about preventing a customer lawsuit from day one. 

Establishing Clear Conduct Policies

One deceptively simple way of protecting your business from a customer lawsuit is to establish conduct policies for yourself and your employees. Although the details will vary, you should consider your standards for:

  • How to treat customers;
  • What constitutes discrimination, retaliation, and harassment;
  • Responding to customer complaints;
  • Breaks, overtime, and sick leave;
  • Who should hear concerns;
  • Enforcement responsibility; and
  • Drug and alcohol use and testing.

Many policies must be guided by relevant law, so consulting a business attorney versed in these matters is vital to ensure the policy is legally accurate.

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Monitoring Conduct

To be effective, the code must include an enforcement mechanism, such as:

  • Three-strike rules,
  • Modified job duties,
  • Suspension with or without pay, or
  • Termination.

The best policies are often flexible enough to be broadly applicable but specific enough that those subject to the rules know how to follow them. Remember that you must be willing and able to apply the enforcement mechanism. 

Protecting Personal Assets 

You can face customer lawsuits despite doing everything right. Thankfully, you can minimize potential harm by limiting your personal liability. One common way to do so is by registering your business as a limited liability company (LLC). Other liability-limiting business structures include:

  • Limited liability partnerships (LLPs),
  • Professional corporations (PCs),
  • C corporations,
  • S corporations, and
  • B corporations.

Your attorney can help you explore your options and decide the best structure to meet your needs.

Obtaining Insurance

Another key way to protect your assets is liability insurance. Liability insurance can cover you even in the event the customer prevails in their claim against your business.

Responding to Customer Lawsuits

If a customer sues your business, contact your attorney right away. If you do not have an attorney, find one as soon as possible. It can be tempting to resolve the dispute yourself, especially for business owners who are used to tough negotiations. But the risks far outweigh the potential rewards. 

Avoid direct communication with the customer unless directed by your lawyer. Depending on how public the lawsuit is, you may need to prepare statements to reassure your other customers and business partners. Make every effort to consult your lawyer before you release any public statements.

Managing Ongoing Customer Lawsuits

Chances are, if a customer sues you, the case will drag on for months or even years. In the meantime, you still have a business to run. As you manage your business while juggling a lawsuit, rely on your lawyer. Having a lawyer you trust to fight for your interests will allow you to stay focused on running your business. 

Dealing with the Aftermath of Customer Lawsuits

Sometimes, customer lawsuits are baseless, but even the best businesses can make missteps. After a lawsuit ends, you have an opportunity to take stock. Are there practices you could improve upon? Are there ways you could have avoided this? If you see improvements you can make to prevent customer lawsuits in the future, start implementing them as soon as possible. Give yourself a moment to celebrate, then be ready to dive back in to minimize the chances of future lawsuits.

What You Can Do Now

The best first step to protect your business from a customer lawsuit is to hire an experienced business lawyer. Consulting with a lawyer before a customer sues allows you to be prepared when that day finally comes. And, if you already find yourself in the midst of a lawsuit, hiring an experienced business attorney, like those at BrewerLong PLLC, can help you mitigate harm, now and in the future. We are committed to helping the businesses in our community thrive, including setting your business up to avoid lawsuits and defending against them when they break through your defenses.Contact us to learn how we can help.

This blog post is provided on an “as is” and “as available” basis as of the date of publication. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel–hopefully BrewerLong.

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