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5 Ways You Can Prevent Your Business From Facing Legal Action

31 July, 2019

Legal action against your business cannot only dent your finances, but it can also negatively affect your reputation in an industry and could lead to a loss of custom.

It makes perfect sense that you might be worried about your company landing in court at some point in its lifetime. There are, however, various ways to minimise the risk.

Read the five ways you can prevent your business from facing legal action.

  1. Invest in the Right Insurance Policy

While you might endeavour to maintain harmonious relationships with your employees and clients, they could potentially embark on legal action against your business.

For example, a client might believe your services led to their damaged reputation, so they might undertake a compensation claim to receive financial justice.

Thankfully, you can turn to Hiscox for professional insurance for service providers, which can cover the cost of a compensation claim and your company’s legal fees.

  1. Thoroughly Understand Your Legal Requirements

Every business owner has a responsibility to remain up-to-date with the law, which could prevent their business from being deemed negligent or unscrupulous in court.

As new pieces of legislation are passed regularly, you must ensure your business remains legally compliant.

It might be wise to hire a knowledgeable HR consultant for advice on how to create a lawful business.

  1. Maintain Accurate Records

Protect your business from legal action by maintaining a paper trail of everyday employment situations, which could support a future legal case. For instance, you should maintain an accurate record of:

So, if an employee embarks on a legal claim against your business, you’ll have the documentation you need to potentially counteract their case and prove you followed the letter of the law.

  1. Train Your Management Team

A lack of training could leave your business open to multiple claims, which could damage your brand, reputation, and finances. It is, therefore, wise to train your management team on how to deal with challenging situations in the workplace. For example, they could ensure the company remains legally complaint when handling potentially volatile incidents at work, and they could help the business to maintain a safe, fair environment for every member of staff.

  1. Protect Your Intellectual Property

If you have a unique product that fills a gap in the market, you must aim to protect it at all costs, which can prevent you from embarking on legal action in the near or distant future.

There are various ways your company can protect its intellectual property, as you could:

  • Apply for a patent for your inventions and products (such as machines, medicines, and tools)
  • Trademark your product name, logo or jingle
  • Copyright your content (such as your literary works, photos, artwork, music, etc.)
  • Register a design (e.g. a shape, pattern, colour, or packaging)

It is, however, wise to consult a professional for advice to ensure your unique idea or product is fully protected by the law. For example, if you are applying for a patent, you should consult a patent attorney for informative advice.


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