Limiting legal and liability risks is very important because not properly preparing for possibly unexpected legal and liability issues can easily cost you your business, home, and personal finances. Establishing a solid professional relationship with a business attorney or law firm is the corner stone of your business to prepare you for legal/liability risks. Legal/liability risks can come from your customers, your vendors, and yes, your employees. They are also usually associated with the other common operational risk areas, but not exclusively so. Again, how you prepare and address these risks can be the difference between success and destruction of your business, nonprofit, medical, or dental practice. The preparation for addressing these risks should start when you begin your business by identifying an attorney you trust and who has a proven track record of providing legal services to businesses. Starting a business with an attorney is the right way to prepare for the any/all legal/liability issues that may occur in your operations. At a minimum, you and your business will need sound legal direction with contracts, leases, and insurance.
Contracts: Businesses usually will have contracts that involve leases, vendors, employees, and customers all of which need the guidance of a business attorney. Lease contracts may involve property, equipment, and personal guaranty. Vendor contracts may involve long or short term purchase orders and personal guaranty. Employee contracts may involve employee agreements, employee handbooks, non-disclosure, non-compete, or employee misconduct. Customer contracts may involve purchases, services, or warranty issues. It is important to recognize when you need to contact an attorney, as this may save you time and money. You should contact an attorney for contract drafting and review, creation of documents, and disputes with vendors, employees, customers, or lessors. You would not in most cases contact an attorney regarding injuries to employees or customers, or to your premises as these issues should be addressed by an insurance company.
Leases: Whenever you are entering into an agreement involving leases it is always wise to have your business attorney review the agreement to protect your interests and to make sure that there are not clauses in the agreement that are unreasonable or adverse. Leases should protect both the lessor and the lessee and be mutually beneficial to both parties.
Insurance: The days of simply filling out insurance forms for business claims is long gone. Insurance claim forms are far more complicated and full of legalese. A good business attorney knows how to properly fill out a claim form so that you get reimbursed fairly and quickly. In addition, an attorney will advise you on what supporting documentation should be provided depending on the type of claim, such as water damage, fire, theft or vandalism, or natural disaster. Having an attorney up front will reduce the likelihood of your claim being rejected or adjusted to a lower dollar amount.
As previously mentioned in the last column, the lack of an employee handbook, which is the most common liability risk factor identified during a risk assessment, is a primary concern of businesses. An attorney can craft an employee handbook that affords protection from unexpected events such as Sexual Harassment, Poor Employee Performance, Employee Disputes, Discrimination, and Work Place Violence. Having a well-crafted employee handbook can resolve liability issues and protect both the employer and employee from potential litigation. A well written and publicized employee handbook that is routinely updated as laws change, or new laws are enacted, is an extremely important tool. Again, as previously mentioned in the last column, an employee handbook is especially important with the Medical Marihuana and Recreational Marihuana laws in Nevada especially with possible changes at the federal level. In addition to the employee handbook, business owners need to be prepared for a wide range of liabilities issues that could arise from vendors, customers, and employees. Some examples are listed below:
- Payment issues
- Receiving/return issues
- Product substitution issues
- Billing issues
- Customer satisfaction issues
- Product/services issues
- Injury issues
- Workman’s Compensation issues
- Employee agreement/contract issues
- Work place violence
- Performance and conduct
In summary, to properly prepare for and address legal/liability operational risks it is important to have a sound relationship with a business attorney. Choosing a good business attorney is like choosing a good physician, do your research online, make a list of potential selections, ask other business colleagues for referrals, make appointments with the top three, and determine if your personalities match based upon your appointments. Taking the time to choose a business attorney that works for you is time well spent. Make sure that you choose an attorney that not only meets your needs but one you can afford. In this regard, remember the old saying that is still valid, “Pay an attorney now or pay him/her much more later.”