As an attorney who regularly sues businesses, sometimes for hundreds of thousands or even millions of dollars, former corporate defense lawyer, and the wife of a small business owner, these are my basic recommendations for all businesses:
Make sure you purchase at least general liability insurance, for the business premises, worker’s compensation, and auto insurance, for all company vehicles. You should purchase coverage that is roughly equivalent to the amount you cannot afford to lose from a lawsuit. So smaller companies can purchase smaller policies. Most commercial policies are one million, but that amount could be higher or lower , depending, again, on the amount the business wouldn’t want to lose. Some specific industries may require specific policy amounts, such as truck driving companies. If you are not sure, either ask your insurance broker, or call a corporate lawyer.
If you do not have sufficient insurance, and an employee, customer, or other person, gets harmed on your business premises, or due to your business activity, your business could be directly sued for tens or hundreds of thousands, or even millions in the most catastrophic cases.
Every business should, if at all possible, require payment up-front, for any and all products and services. Without payment up-front, getting paid on the back end might be impossible, largely because the cost to sue (which can easily exceed 100K) often isn’t worth the money lost. This is the primary reason most lawyers, other than those who work on contingency (which is usually only injury, accident, or consumer lawyers), require payment of a substantial retainer, which must be kept replenished after the lawyer earns the initial retainer, before the lawyer will start work. Other industries would be wise to do the same thing, if possible given what payment methods are standard in the industry. Certainly any business risking substantial amounts of time or money to perform any service, or deliver any product, should require payment before starting work, or delivering the product.
Every business should have contracts for sales of their services or products. These documents help define the scope of the work, and also can expressly limit damage amounts, provide for disputes to be resolved only by arbitration, and even specify things like where lawsuits can be filed, or who is responsible for attorneys’ fees, if a dispute were to arise.
Every business should have business formation documents, such as partnership agreements, incorporation documents, and the like. These should be created or reviewed by a business lawyer, not purchased from the local office supply store. Without these, enforcing legal rights, including those related to company ownership disputes, can become very expensive or impossible to resolve. Minority shareholders are particularly vulnerable, because they have very limited legal rights in most states, without shareholder agreements, which could give them more power and control. Certain types of legal business entities may also limit personal liability, for example, a limited liability company. So this recommendation really applies to anyone who forms or owns a business.
About the Expert: Ms. Willis handles serious injury, accident & death cases in Orlando, Florida. She is a former law professor and big firm defense lawyer, who spends a lot of time educating her clients about how to get the most money possible from their cases, then fighting hard to help them recover every penny they deserve.
Find Ms Willis at: https://injuryattorneyflorida.com