A class action lawsuit can be a nightmare for a small business. If you have taken the time, efforts and money to build your business, you do not want to see it be destroyed by a class action lawsuit. Learn more about how these lawsuits can destroy your business and how you can protect yourself and your business.
What is a Class Action Lawsuit?
A class action lawsuit is a lawsuit which is filed for a group of individuals who claimed to have been wronged or injured by the actions of the business they are suing. These suits are often filed by the employees of these businesses or a third party. The potential for these lawsuits to destroy a business is great. Even a business which wins a class action lawsuit can be harmed because these lawsuits are costly and can be damaging to a business’s reputation. This is why learning how to prevent them is the best line of defense. It has been estimated that less than 60% of business in the United States are implementing any type innovative risk management to protect themselves from class action lawsuits.
From the time you start to form your business, it is crucial to have a business attorney. Anyone who owns a business and does not have an attorney needs to consult with one immediately. This needs to be done before a class action lawsuit is ever filed or any other type of avoidable harm threatens a business. An attorney can help you take measures to ensure the validity of your business and protect your personal assets. They can also write contracts in such a manner that they will discourage lawsuits being filed in the future. A business attorney can also educate you on crucial information regarding class action lawsuits and help to build a solid foundation for your business to thrive upon. In situations where a class action lawsuit has been filed against your business, they can help act quickly to prevent damage being done to your business since they are already familiar with your business.
Division of Business and Personal Finances
Many new business owners do not take the time to properly make a division between their personal and business finances. Many of them often get swept away with the many demands it makes on their time. Not making the time to do this can be very harmful to them down the road.
Personal and business finances should always be kept separate. Doing this helps to avoid issues which affect the business from affecting your personal life. A class action lawsuit can cause you to personally go bankrupt if these finances have not been properly separated. A lawsuit of this type has the potential to eliminate almost all of your assets and personal savings. A business attorney can help you properly separate these finances and protect your personal finances in the case of a class action lawsuit or similar situation. Even if your business assets are affected, you will have the peace of mind knowing thatyour personal assets remain intact.
Incorporate Your Business
Separating your personal and business finances is not the only action a business owner needs to take to safeguard their personal assets. All too often small business owners downplay the importance of incorporating their business. This is something a business attorney can help you do properly.
An important way to safeguard your small business against damages from a class action lawsuit is to incorporate your business. This will ensure that in the case of a class action lawsuit, you will avoid circumstances which could affect your personal life. Incorporations make any losses you might suffer far less significant. By remaining a sole proprietorship, the costs of a lawsuit and related issues could affect your finances, savings and assets. By remaining in a partnership, you could cause yourself and your business to go bankrupt in the case that your partner is sued. Incorporating your business is the only way in which you can safeguard against significant losses to your personal finances in a variety of legal situation which could occur.
Obtain Liability Insurance
All types of businesses need to have professional liability insurance. This is a crucial component of running a business and protecting it from potential harm from class action lawsuits and other forms of damage. Many small business owners make the mistake of thinking that basic liability insurance is all they need to protect them in the case of a lawsuit. The reality is that basic liability insurance is not enough to help situations where a class action lawsuit is filed against a business. Professional liability insurance offers additional protection from various cases of class action lawsuits being filed against you. You need a policy which states “right and duty to defend”. Again this is something which an experienced business attorney can assist you with.
Business owners need to keep in mind that waiting to obtain an attorney or take steps to guard against the damages from a class action lawsuit after it has been filed is dangerous. The best protection is to take steps as soon as possible to obtain proper protection from damaging lawsuits. In many cases, business owners who have taken the proper steps and consulted with a business attorney have been able to avoid damages from these lawsuits because the law is on their side.
The Time is now
Take the time to put a plan of action into place to protect both your business and your personal assets. Contact the Webb Bordson Law Group today. You will learn more about the steps you can take to ensure that you protect the business you have built or are starting to build. Call the WB Law Group at 619-399-7700 (San Diego) (559) 431-4888 (Fresno). You can also send an email to Office@WBLawGroup.com for more information. You can put their years of business litigation expertise to work for you and your business.