Lawsuits, even frivolous ones, are expensive. According to the Court Statistics Project, the median cost for a contract case that goes to trial and on to post-disposition is $91,000. Maybe even more cringe-worthy, though, is a finding from the Institute for Legal Reform that even a frivolous lawsuit that’s dismissed by the court costs an average of $2,000 to $5,000.
Contracts and communication can help you avoid lawsuits, but additional steps can protect your business further:
- Keep records on every project.
- Document the business relationship.
- Say no when projects don’t fit your skills.
- Invest in professional development.
- Purchase liability insurance.
None of this guarantees you won’t be sued, but taking these steps can minimize your risk that a suit will wipe out your finances.
Here’s a final thought: One of the most effective risk management tools for a business is keeping revenue strong. These four to-dos help achieve that goal by reinforcing that your business is serious and professional, which helps win the trust of new clients.
Ted Devine is the CEO of Insureon, a leading online provider of small business insurance. Prior to joining Insureon, Devine held senior leadership positions at Aon Corp. and McKinsey & Co. He lives with his family in Chicago.