How to Protect Your Business Against Unsubstantiated Claims

Feb 20, 2020 by

You work hard to deliver what your clients expect from a professional in your business. But the hard truth is that no matter how hard you strive to produce excellent work, there is always the chance that one or more of them could claim that you failed to deliver what you promise. Even if there is no validity to their claims, if they sue your business it is going to be a hassle. That is why it is so important to do what you can to protect your business against these kinds of claims.

7 Tips for Protecting Your Company Against Frivolous and Unsubstantiated Claims

1. Insure your organization as best you can.

There are a variety of business insurance products out there that cater to different types of businesses. The reason small and mid-sized business owners get such coverage is because they know that lawsuits are part of the game. If you are in business long enough, someone is going to sue you.

One of the most prevalent types of unsubstantiated claims is the claim of undelivered or unsatisfactory work, particularly for professionals that offer expert advice or services. You enter into an agreement with a client and produce work for them – and they turn around and claim that you didn’t deliver the work, that the work was unsatisfactory or that you were negligent in your duties. Professional liability insurance protects your business in these situations. If you are sued, your insurance will pay for your legal fees whether you win the lawsuit or not.

2. Understand that ignoring lawsuits is not the answer.

It is extremely common for business owners who are sued for unsubstantiated claims or in other frivolous ways to try and ignore the situation. After all, you know that what they are saying about you and your business is nonsense. You did not do anything wrong so you have nothing to worry about. But you need to know that just because you are certain that you are in the clear does not mean that you actually are. Lawsuits can go to unexpected places surprisingly fast and cost you a lot of money if you are not careful.

If you are notified of a lawsuit against your business – any lawsuit, even a frivolous one – you need to contact your insurer immediately and then get a lawyer if your insurer does not provide one. It is the only reasonable and smart way to protect your interests.

3. Create a company culture of honesty and integrity.

From the owner on down the line to the lowest-level employee, every individual working for your business can potentially put your company at risk through bad behavior and negligence. They all work for your business and while they are performing company duties they are representing your organization. Any crack in the integrity of the organization puts you at risk for lawsuits.

Businesses combat these risks by striving to create company cultures that prioritize good behavior. If your business always acts in ways that are beyond reproach, it makes it much harder for those making unsubstantiated claims to gain any ground with a lawsuit. The company culture starts with you and the values you present and encourage, so take some time and consider how you can best establish the kind of culture that will protect your company over the long term.

4. Know the laws and regulations that apply to your business.

You may have already heard this before, but it bears repeating – ignorance of the law is not an effective defense in court. Just because you did not know that you were breaking the law does not get you off the hook if you get caught and targeted with legal action.

Whatever your industry, there are laws, standards and regulations that apply to businesses like yours. You need to be well-versed in all of these rules so that you can ensure your company always adheres to them. That way, if you are targeted with unsubstantiated claims, you do not have to worry that some other mistake will be brought to light through the legal process.

5. Keep your promises and adhere to your contracts.

Through the course of doing business, it is normal to get overwhelmed sometimes with the many obligations that you find yourself under. The success of your company and the longevity of your organization depend on your keeping the promises your company makes – particularly those made in the form of legally binding contracts. If you slip up and miss something, it puts you at a higher risk of having an unhappy client or customer coming back at you with a frivolous lawsuit claiming you did much worse than you actually did.

One practice that can help you avoid too many obligations is to try to under-promise and overdeliver. Set expectations that you are sure you can reach and when you can, do a little extra.

6. Try to be nice, kind and understanding – even when it’s hard.

Sometimes the seed of a frivolous lawsuit is planted through a very minor incident. Snapping at an irritating customer, brushing off a complaint that you think is overly dramatic or being too hard-nosed in your demands or requirements with a client can breed resentment. Resentment is often at the core of unsubstantiated claims and frivolous lawsuits.

Now you can’t be on your best behavior at all times, but you can do your best to be a nice person and have your employees do the same when interacting with clients and customers.

7. Know you will get through this.

A frivolous lawsuit based on unsubstantiated claims is definitely frustrating – but it is not the end of the world. You know that the lawsuit has no legitimacy and you have taken the appropriate steps to protect your company. Now all you can do is move forward and hope for the best. Keep at your work and keep building your business. Soon the lawsuit will be over and behind you.

Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.