How to avoid getting sued as a corporation?
Maintain good communications
Keep your clients informed of all key project advancements and respond to their messages quickly (within 24 hours) to show them that they are your first priority. Maintaining meticulous records of all important conversations with clients, including copies of letters and emails as well as dated notes from phone calls, is equally important. Even if a project-related issue emerges, a client who thinks he or she can contact you and that you are committed to the project is less likely to file a lawsuit or file a grievance. On the other hand, thorough and accurate records of your conversations with the complaining customer are essential to any defense if a lawsuit or grievance should arise.
Whatever choice a client makes, make sure that the advice you gave them is documented in writing so that it may be used to support that choice. If a client chooses to adopt a course of action that you advise against, do so while stating in writing that you would advise against it. If you are unable to carry out the proposed course of action (for instance, if it would be unlawful, unethical, or dishonest), let the client know right away and explain why. In that case, if the client demands, you might need to withdraw your services.
Be careful when choosing your clients
The client who requests that you participate in behavior below your professional standards is a very high risk for your business. Furthermore, such clients may subject you to more than just a professional negligence lawsuit or grievance procedure; they may be held accountable for any fraud or criminal behavior they commit while under your guidance. When red flags appear, keep in mind that the costs are likely even greater than the potential gains. These risks can include having to defend a grievance, facing a drawn-out and expensive malpractice case, or even losing your license.
Be proactive with client grievances
Even the finest of relationships can turn if the customer feels like you don’t care about the issues they raise with you. Not only should you swiftly acknowledge any complaints, but you should also provide information about the client’s issues and a strategy for resolving them. Whether or whether you believe you are at fault, accept responsibility for making things right. This includes giving the customer options, suggestions for what to do next, and suggestions for how to prevent the problem in the future.
Maintain enough liability coverage.
Insurance firms frequently offer policies where the defense costs either do not degrade the coverage amount or do so slowly. Remember that defending against a lawsuit might occasionally cost well over $100,000.
The legal structure of your firm, including asset protection, personal assets, and bank accounts, is another aspect to consider while defending your company in the event of a lawsuit.
Sole proprietorships. Since forming a sole proprietorship is the easiest and most affordable option, many small business owners choose this option. This corporate structure does not, however, shield the owner’s personal assets (house, bank account) from responsibility in the event that the company is sued. In other words, the owner’s assets will be at stake if the company is sued.
LLC, or limited liability company. This type of business structure, in contrast to a sole proprietorship, provides asset protection for the business owner by dividing the assets of the owner from those of the company. The business owner is not personally liable if an LLC is sued.