If you’ve read a previous Under 30 CEO article, then you know the basics on business insurance. Most businesses will need a few different types of insurance that will protect them in the event of a law suit, like general liability insurance, product liability insurance, and errors and omissions insurance. If you have these policies now, that’s great! At the same time, however, you should do everything in your power to avoid a lawsuit even if you are covered. Especially since we live in a litigious society, a lawsuit could be just around the corner if you’re not careful. Here are a few basic ways to avoid business-related lawsuits altogether:

  1. Review all contracts with an attorney before signing them.

As you probably already know, when you first start a business, you’ll have all sorts of contracts to sign. Whether it’s the lease for your office space, employee contracts, or written agreements between you and your suppliers or you and your customers, it’s important to read everything carefully. Seeking legal help is best, because an attorney can advise you on how to draft the most effective contracts that limit your liability.

  1. Hire and fire employees carefully.

As noted on the blog, Xcel HR, employment lawsuits are among the most costly and time-consuming law suits out there. In order to decrease your chances of being sued by an employee, it’s important to hire the right people, people who are more concerned about their passions at work than money and vengeance. Also, it’s important to consult with a lawyer before terminating an employee, just to make sure that you aren’t being left open for a wrongful termination suit. Have your attorney also carefully review employment contracts, handbooks, and other materials to make sure that you aren’t taking on a liability that you aren’t even aware of.

  1. Resolve customer complaints quickly and effectively.

Another major source of business-related lawsuits is customers filing suit when they feel that they’ve received a faulty product or service. Of course, your product and/or E&O insurance should cover you, but it’s best to avoid customer lawsuits by handling complaints effectively. Set up an system for processing complaints that’s efficient, and be sure that your customer is quickly directed to the right person who can help them. After all, the customer is always right and is your strongest asset as your business grows. Don’t alienate them; give them a thorough and quality customer experience.

  1. Be careful when raising money.

As a start-up, your business will likely need lots of initial capital in order to begin to grow. What many entrepreneurs aren’t aware of is that there are very specific rules regarding raising money for businesses. If you break one of these rules, you leave yourself wide open to lawsuits. Check out this Entrepreneur.com article to get the basics, and, as always, consult a lawyer before raising funds.

Of course, sometimes it’s simply impossible to avoid a lawsuit, especially once your business starts to grow. The best advice to consult a knowledgeable attorney with every step forward you take in your business. Good luck!

Carol Wilson is a freelance writer and blogger. Having previously worked in the insurance industry, Carol enjoys advising her readers about everything related to insurance as well as entrepreneurship and small business strategies. Feel free to leave comments below!