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How litigation risk management helps California companies

On Behalf of | Jun 28, 2021 | Employers' responsibility

Too many business owners and executives don’t think about the risk of a lawsuit brought by an employee until someone sues. All of a sudden, there is a mad scramble to get legal advice and to try to limits the effects of the situation on the company.

Rather than waiting to respond to a claim from an employee or previous employee, your company can take steps right now to minimize its litigation risks. Being proactive could potentially save your company tens of thousands of dollars in the future.

What are your company’s biggest risk factors?

Different businesses have different risks as far as potential lawsuits. From consumers bringing a class-action lawsuit over a defective product to employees alleging discrimination or wrongful termination, there are likely many areas in which your business could be vulnerable. The more employees you have, the greater the overall risk for an eventual claim.

Looking at your business model, your employment contracts and your operating records can give you a better idea of what risk might eventually lead to a lawsuit against your company. Once you recognize those individual risk factors, you can address them through internal policy, employee training and even insurance coverage.

For example, you may not have created a harassment reporting policy when you first started hiring people because you knew all of the workers personally. However, as the company grows, you will need to make sure people can speak up safely if they face mistreatment by coworkers or supervisors. Identifying your litigation risks gives you the opportunity to defuse them.


It can be hard to identify your own risk factors

The more time and effort you have invested in your company’s current model and operations, the harder it may be for you to objectively review the company’s risk for litigation. You may also fail to understand which risks are most likely to lead to court and which will cost your company the most.

Partnering with an attorney to analyze your company for its lawsuit risk and mitigate the most significant risk factors can offer you better protection and greater accuracy during the review process than if you tried to handle it in-house. Recognizing that you need to perform such an analysis is usually the first step toward protecting your company from massive future setbacks.