How small companies can handle a lawsuit

On Behalf of McNabb, Bragorgos, Burgess & Sorin, PLLC | Aug 23, 2022 | Business Litigation

Small businesses in Tennessee and throughout the nation tend to have less room for error when it comes to managing their finances. It isn’t unheard of for a single bad month or quarter to put such a company out of business. In some cases, a single event such as an employee or customer lawsuit could be the reason a firm is forced to cease operations.

Minimize your liability
You can’t predict when or why someone may decide to take legal action against your business. However, you can minimize the potential damage a lawsuit may cause by being proactive. Obtaining business insurance and incorporating your company are two relatively easy steps that may keep it from going insolvent if a judgment is rendered against it. In such a scenario, having insurance means that someone else is going to pay some or all of a plaintiff’s award. Operating as a corporation or LLC means that only company assets will be at risk if your insurance policy doesn’t cover the entire award.

Don’t panic
Simply being involved in a business dispute doesn’t mean that you have done anything wrong or that you’ll have to shell out any cash. Generally speaking, the best thing to do is to stay calm and spend your time gathering information that bolsters your position. For instance, a witness statement or video footage may contradict the plaintiff’s claims and lead to a favorable outcome in your matter.

If your company is taken to court, it doesn’t necessarily mean that you will resolve the matter through litigation. It’s possible that the plaintiff will agree to settlement talks, and there is also a chance that a judge will agree to your request to dismiss the case.