No business owner wants to get entangled in legal troubles. Whether it’s regulatory challenges or someone commits a white collar crime, there are many different areas where legal risks can hide in a business. Most litigation can be avoided if businesses pay attention to the details. Knowing where these risks are and then making a plan to account for them can help your business not only stay out of legal trouble, but also thrive in the process. Let’s explore some practical ideas to help you stay ahead of potential legal pitfalls.
Franchises and Risk of Legal Disputes
People love franchise businesses because the brand itself helps the new location gain a loyal following more easily. But these kinds of opportunities come with lengthy contracts and agreements between franchisors and franchisees that can be tricky to maneuver. Add to it disputes on territories, royalties, vendors, and even brand usage, these legal pitfalls can add up quickly.
What helps franchisees is to pay close attention to all contracts to ensure that they don’t inadvertently break an agreement. They can also partner with a business lawyer to ensure that they understand their obligations in a contract and how they promote the franchise. This better helps them to avoid legal disputes and to stay out of trouble when they are running their local business.
Not Using Court Reporters
In the event that your business does get into some troubles that require legal expertise, it’s important to create accurate documents. Depositions and legal proceedings get transcribed by highly trained court reporters. You’ll find them transcribing legal proceedings in the court, creating records of important business meetings, and even documenting eye witness testimony if there is a criminal case. Companies may even use court reporting for internal investigations, audits, and executive communications.
If you’re running a business in Texas, for example, you may need Houston, San Antonio, or Dallas court reporters who can create an accurate record of your business interactions with a client to determine if there is a breach of contract or criminal activity. If a case goes to trial, lawyers and other legal professionals all rely on the documentation created in the pre-trial stage by the court reporter for these testimonies and other facts. Even one misinterpreted or inaccurate piece of information can create enough doubt to throw out an entire case or create major setbacks.
Understand the Impact to Reputation
Money can always be earned, but a bad reputation is harder to come back from. One major legal challenge can set a business back for a long time. Everything from public filings, industry gossip, and even media coverage leading up to a trial can create reputation challenges even if the company is not at fault. People’s perception of a company plays a big role in whether people will continue to use it or not, and it doesn’t matter if the company is innocent or not if media coverage makes them look bad.
Being prepared for this risk requires having a reputation management plan in place before anything ever happens. Your company needs to know how it will respond to media inquiries, communication challenges, and even maintaining an operation that values integrity in the first place. Make sure that your loyal customers won’t be swayed by scary news reports and headlines while you wait for the truth to come out.
Financial Fallout of Bad Risk Planning
Poor risk planning is expensive. What this means is that while you think you are saving money by skimping on a good risk plan, what happens when something comes up that you didn’t account for? You might get higher insurance premiums, less access to capital, and even take a hit on your reputation. Or, you may end up using your hard earned cash flow on lawyers instead of investing it back into the company.
Good risk planning means looking at everything from your HR processes to your cybersecurity to how secure your physical building is at night. If you don’t do your due diligence, some issues, especially when it comes to compliance could create the need for litigation. Have a plan in place to help steer you away from these risks and keep more money in your bank account.
When businesses do their due diligence to focus on risk management, use court reporters effectively, and even have a reputation plan in place, they can often avoid many litigation challenges. Following the law is of course important, but in some situations, even accidentally breaching contracts can inadvertently create legal headaches. When companies know what areas to look for they can better stay free from litigation and run a business that can grow and do it well.
