Avoiding Lawsuits

Tips for Avoiding Lawsuits

Get it in writing.

Communicate.

Have adequate liability insurance.

People don't sue people or companies they like.

Lawsuits from employees

Adopt internal written policies and procedures, job descriptions, employment contracts and employee manuals and follow them even if you don't want to. Policies which are not enforced or enforced selectively may not be policies at all. Document the reasons for termination for cause, as well as the steps taken prior to termination. Be careful with humor, social media, non work related opinions.

Lawsuits from customers, suppliers and contractors

Use written contracts with specific terms. Be careful with “form” contracts from the internet. Read and understand the terms, and modify them for your Texas business. Include in all contracts a provision that if a problem arises, the parties will try alternative dispute resolution or mediation before going to the courthouse. The best prevention tool is open communication. Put it in writing. Oral conversations can be followed by a confirming email.

Lawsuits from the public

The key here is avoiding lawsuits against the business owners PERSONALLY. Pay attention to your business structure and the protection from individual liability it should provide. Keep your corporate or LLC records up to date. You should have at least written minutes of annual meetings of directors and equity owners, an operating agreement, bylaws and records of ownership changes.