ATTORNEY INSIGHT: WHY SMALL BUSINESS LAWSUITS ARISE

Owning and operating a small business for many folks is a dream come true. However, our Lake Mary small business attorneys know that if you’re hit with any kind of litigation, it can quickly start to feel like a nightmare.

Working with a small business lawyer from the start helps to reduce your risk of liability, significantly lowering the chances you’ll face a small business lawsuit in the first place.

Still, there is no denying small business lawsuit statistics from the U.S. Small Business Administration that somewhere between 36 percent and 56 percent of small businesses are involved in some form of litigation annually.

Most small business owners are inexperienced with handling lawsuits, and thus may be blindsided by the impact and expense. The result is their business may be in jeopardy. It is critical to plan ahead and also to know what to do if your small business is suddenly faced with a lawsuit.

Lake Mary Small Business Lawyers Explain: Claim v. Lawsuit

One of the first things our Lake Mary small business attorneys explain to new business owners is that there is a key difference between a claim and a lawsuit. There are some similarities, but key differences – and the two are distinct.

With a claim, a person or another business asserts a mistake was made, but it generally only involves insurance companies. In the event the insurer(s) can’t reach an amicable resolution, it may turn into a lawsuit.

A business lawsuit is a formal legal proceeding that might wind up in court if both sides can’t agree to a settlement.

Reasons Small Businesses Are Sued

A Lake Mary small business attorney will tell you that businesses are sued for a broad range of reasons, from breach of contract to defective products to non-compliance with federal regulations, such as the Family Medical Leave Act or the Americans with Disabilities Act.

The two main sources of Florida small business lawsuits are employees and customers.

When it comes to employees, business lawyers have seen many times it’s because a worker (or applicant or former worker) feels he or she was treated unfairly or that management failed to adequately address a reported complaint.

Some of the reasons employees commonly sue an employer include:

• Not clear on reason for termination
• Terminated following a bad performance review that followed several good performance reviews
• Belief that timing of the termination is suspect (for example, after they filed a complaint)
• Belief that company failed to take their concerns seriously
• Employer failed to follow its own policies

Customers too can be a prime source of litigation for Florida small businesses. Some examples of small business lawsuits arising from customers include:

• Personal injury on the business property
• Discrimination
• Injury due to product

Other businesses too might also sue a small business owner, usually for some type of breach of contract.

When a small business lawsuit is justified, your small business attorney may advise you to settle the case quickly out-of-court, which is less expensive and less damaging to your reputation. Frivolous claims and lawsuits, meanwhile, are unfortunately all too common. Your business lawyer will be the one you trust to carefully examine the circumstances, the law and what defenses – or even counterclaims – may be applicable.

Bottom line: No one expects to be sued, but one can often avoid the most serious outcomes by being prepared. That means consulting with a business lawyer at the outset, having insurance against the most likely sources of litigation for your industry and knowing exactly where to turn when trouble arises.

Additional Resources:

California Secretary of State