Business owners and managers have a responsibility to protect their businesses from all risks. They may take measures to reduce the severity of the risks or prevent them from happening. This is because risks interfere with the smooth running of the business and may lead to losses.
Some of the business risks include legal risks where the firm may be sued for various issues, for example, the Lundin Oil Sudan trial. The legal suits cost the companies so much for legal representation and other things like tainted reputation leading to loss of sales.
Here are some of the ways business owners and managers can protect their companies from legal cases:
Hiring Competent Attorneys
The business should, from the start, hire a competent lawyer or law firm. The attorney will advise the owners and management before they take any action, and if the company has been sued, recommend to them the steps to take. Ideally, the lawyer should be familiar with the state’s laws where the business operates. They should also be well equipped in the critical areas on which the company could need legal counsel, for example, tax and employee relations.
Owners Separating Themselves from the Business
Some entrepreneurs run their businesses as sole-proprietorships. Although the arrangement allows owners to control business assets easily, it exposes them to risks. If the company is sued or has some debts, the owner’s private assets can be attached in a court of law. The owner can separate themselves from the business by having a trust as the owner of the company.
Trusts act as individuals because they are legal entities, and if they are sued or indebted, only the assets that are registered as owned by the trusts can be attached. Incorporating is another way a business owner can put a boundary between the business and themselves. Hover, the owner will have to understand and abide by the state’s requirements for corporations.
Owners and Employees Watching Their Actions and Words
Given that the business image is so critical, business owners and employees must be cautious about what they do or say. They have to steer away from making public pronouncements or engaging in dealings that may be suspicious. This includes avoiding statements that can be considered slanderous or libelous and not doing business with people of questionable character.
In dealing with unscrupulous people, the business’ name may be dragged into such issues, therefore tainting its reputation. As a business owner, you and your staff must also keep away any situation that can bring conflict of interest because they can damage the business reputation and expose it to litigation.