If your business faces litigation in the new year, it can certainly take a toll. Even if you win your case, it can take time to sort through the legal details, and it may be a costly enterprise. It also pulls you away from your main focus of running the business, and the litigation itself could harm your company’s reputation.
As such, you may be interested in protecting your business, avoiding litigation and helping things go smoothly in 2025. Let’s look at some ways you can do so.
Steps you can take in advance
The important thing is to consider what you can do in advance to prevent litigation from occurring in the first place. Some tactics include:
- Setting your business up as an LLC: This can help by removing your personal liability. For instance, even if the business goes bankrupt, you are not personally liable for the business loans taken out in the company’s name, so you won’t be sued by creditors.
- Establishing proper contracts: It is very risky to enter into a business relationship with a vendor, another business owner or a business partner without getting the agreement in writing. A handshake deal is much more likely to lead to complex litigation, whereas a comprehensive contract can define terms and relationships to avoid disputes.
- Carefully navigating employee terminations: If you have to terminate an employee, be sure to do so correctly. Follow the terms of the contract, if they have one. If the employee is at-will and does not have a contract, you still need to ensure you don’t find yourself accused of discrimination, retaliation or other forms of wrongful termination.
- Carrying out regular compliance reviews: Legal compliance reviews can be beneficial because they allow you to identify risks and take corrective action before litigation occurs.
- Documenting everything: Litigation often happens when two parties cannot agree and turn to a third party—the court—to resolve the issue. By documenting everything, such as financial transactions, employee terminations, and business partnership agreements, you ensure everyone is on the same page and litigation is less likely.
Understanding how to take these steps in advance can help your business this year. If you do find yourself facing litigation, though, be sure you also know what legal options you have.