4 Tips to Avoid Lawsuits for Your Business

Every time you scroll through a feed or pick up a magazine it seems as if another lawsuit story is underway. Our social default has essentially become to sue first, ask questions later. For freelancers and businesses this poses a hairy situation since any of your clients at anytime can sue you for your work. Regardless of the ridiculousness of the accusations you will still have to swiftly reason with your clients or shell out the cash for legal defense. You may be thinking my client relationships are great and not to brag but my work is amazing, that would never happen to me. Unfortunately, it probably will. Prepare for the inevitably unhappy clients and avoid lawsuits by following these four tips.

Be selective with your clientele.

For freelancers and businesses, not all clients are created equally. It is important to not too eagerly take on prospective clients. Avoid clients that pose to be troublesome and argumentative. Ask your clients questions, get a sense of how they operate and think. You will never be able to detect every bad nut, but having a business protocol that entails getting to know more about your client is a good way to weed out the bad eggs at an early stage. Also being associated with businesses or individuals that have been associated with less than ideal business ethics could jade the business identity and branding you have worked so hard to establish. Research your prospective client. If you are seeing a shady and less than above reproach history. Stop. Evaluate the risk to your business if something goes south and the detriment it could cause to your brand identity. It is far better to decline a job and be short on a little revenue rather than having to painstakingly reassert yourself as a good business or re-brand altogether after being connected to a shady client in a lawsuit. The best way to keep a sustained and highly esteemed business is to be picky with your clientele.

Always have a written contract.


Always. No matter how good your work is or how well you conduct your business someone at sometime will find fault with your deliverables or services.
And no matter how effectively you communicate, you will inevitably have a disgruntled client that is not happy with the finished product or that is demanding further work outside of the original agreements. It is easy to assume that if you do your best work and have impeccable people skills your clients would not dare jump into a legal fight with you, right? Wrong. Your best clients — even if you know them personally — have the potential to sue you. Verbal agreements mean very little, as in next to nothing these days. Always get it in writing.

Include every detail in contracts.

Be as scrupulous in detailed information as possible in your contracts. Clearly listing out all the expectations and decided work you have agreed to will solve much potential miscommunication or your client’s shifting expectations in the future.

Pass this contract back and forth between your client to hash out the nitty gritty details of what this exchange entails until you are content. Often unhappy clients that threaten to take legal measures can be brought back to seeing reason by reviewing the document that they themselves signed if you have clearly listed out the specific terms. If your client is still not consoled, you have a detailed contract that holds up in court.

Get Errors and Omission Insurance.

avoid lawsuits

Even with a well­ written contract, lawsuits are still a potential. Errors and Omissions Insurance and General Liability Insurance are safeguards in situations where you are sued based on work you have provided. They give you coverage to ensure your business isn’t tanked given a client claims that you have not lived up to your agreements. With this insurance, your insurance company handles the bills and filings, and will periodically ask you for answers. But financially, you’re covered. It is an additional overhead cost but when that inevitably cranky client tries to take you to court you will be financially covered.

The longer you’re in business the higher the likelihood you will fall into trouble with a bad nut. Be sure to put these protocols in place so that you do not get drug down the rabbit hole of legal defense. Prepare for when that legal nightmare may unfold, and follow these four tips to cover your assets and a bit of your sanity.