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90% of all companies find themselves on the receiving end of a lawsuit at some point. Taking legal precautions can help to prevent lawsuits from being filed against you, or at the very least reduce the damage caused by lawsuits. Below are 5 examples of legal precautions that every business should be taking to protect themselves from litigation. 

5 Legal Precautions Every Company Should Take

Find a lawyer you can depend on

If your company gets sued and you do not believe it is deserved, you’ll want to have a lawyer you can call upon to help you form a defence. Lawyers can also help you to file lawsuits against other parties. On top of this, they can help offer advice on various legal matters and help you deal with difficult employees or clients who may be threatening legal action but yet to actually file a lawsuit. 

Get contracts professionally written

Written contracts can help provide evidence of the terms and conditions of an agreement. A well written contract should leave no room for misinterpretation, preventing you from being taken advantage of by those looking for a legal loophole. It can also help you to take action against customers who may have broken the terms. Legal writing is a skill – while you can use templates to write your own contracts, a safer option is often to hire a legal professional who can get the wording perfect. 

Insure against the biggest risks

It’s possible to insure yourself against certain types of lawsuits. Public liability insurance can pay out compensation to any parties that sue you for public injury or property damage. Professional indemnity insurance can meanwhile protect you against breach of contract lawsuits. Use companies like Coterie to find the best insurance policy, so that you are protected against the biggest lawsuit risks. 

Choose the right legal structure

If your business gets sued and you are legally classed as a sole trader, you are entitled to pay any legal fees out of your personal income – plus your personal possessions may be liable to get seized. Switching to a limited company legal structure separates you from your business. This means that only your business funds and property registered to your company can be used as collateral – you do not have to pay legal fees out of your personal funds and your personal possessions cannot be seized. There are however extra fees involved with switching to a limited company, so make sure to weigh up both options. 

Research your chosen brand name

Accidentally choosing the same brand name or logo as a competitor could also get you into legal trouble. This is particularly the case if a competitor has trademarked their company name or logo. Always do your research before running with a brand name, and make sure your logo is not too similar to that of competitors. It’s worth noting that you can take protective measures to prevent other companies stealing your brand name and logo – the best solution being to apply for a trademark. This guide at Simply Business explains more as to how to apply for a trademark. 

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