Start-ups face many risks, and just one of these is the threat of a lawsuit that can potentially destroy the business. Businesses face many different types of litigation and as an owner, you must defend against all of them, even when a lawsuit is frivolous. Although there is no surefire way to ensure you will never face litigation in your business, there are steps you can take to greatly reduce the possibility of a lawsuit and lessen the financial impact on your business. While a business litigation attorney may not be able to protect your business from ever having a lawsuit filed against it, they can advise on the most common legal complaints, and how to protect your business from them.
Intellectual Property Lawsuits
Many business owners think that if they enter into a lawsuit involving intellectual property, they will only be considered a plaintiff. After all, the intellectual property of a business is typically the property of the owner. A lawsuit may involve an employee that divulged a trade secret, or a competitor that violated a patent by using the information within it to create a similar product. Unfortunately, too many business owners do not realize that they may also have to defend against certain intellectual property lawsuits.
Employees who work for your business, particularly during its start-up phase, may also contribute ideas that may be considered intellectual property. If the employee leaves and you continue using that idea, they may have a dispute about which party is the actual owner of the intellectual property. It is essential to draft a number of agreements that can help prevent these disputes, such as invention assignment agreement and confidentiality agreements, so you do not have to enter litigation to resolve them.
Breach of Contract Claims
It is difficult for even the most seasoned business owner to understand when a contract contains favorable terms, and to ensure they will have the funding to meet their obligations. For a start-up, it can seem impossible. When you are starting a business, you may not know how much profit you will have coming in right away, or how much capital you will end up investing in the business. As such, you may sign a contract only to learn at a later date that you cannot fulfill the terms within it. Without the help of a business attorney, this could lead to expensive litigation that will cost you even more in liquidated damages.
Protecting you against breach of contract claims is just one of the ways a business litigation attorney can help, but it is also one of the most important. A business lawyer can help you draft any of the contracts you will enter into, and review any agreement another party wants you to sign. Through thorough drafting and contract review, a business attorney will ensure important protective indemnification and liquidated damage clauses are included. These clauses can help you avoid litigation and even if you still face a claim, they can also greatly reduce your costs.
Wrongful Termination Claims
California is generally an at-will employment state, like every other state in the country. At-will employment means that as a business owner, you retain the right to hire employees and fire them at any time, or for any reason. Likewise, your employees can also quit at any time and for any reason, or no reason at all. At-will employment offers you many protections, but there are times when a termination may be deemed wrongful by the courts and as such, could mean you face a wrongful termination lawsuit, and even lose your case.
Employers in California are prohibited from firing an employee based on discriminatory reasons. Both state and federal law are clear about certain protected classes, including individuals of a certain race, age, sex, national origin, disability, and more. Even demoting a pregnant employee due to the fact that you do not think she can perform certain duties, or denying the employee lighter duties upon request can land you in legal trouble, even when your intentions were good.
Many times, business owners of a start-up company are not aware of the state and federal employment laws, and while they may not fire someone based on discrimination, an employee may make it look as though you did. A business lawyer will be familiar with these laws to fully explain them to you, and ensure that your business is in compliance.
Wage and Hour Lawsuits
As a business owner, you want to pay your employees a fair and honest wage. However, whether you pay your employees an hourly wage or a salary is one of the most common questions business owners have when they are starting a business. Unfortunately, there is no easy answer for every business to follow, and even when you decide to pay your employees an hourly wage, you will have to consider overtime and wage laws.
Even understanding the minimum amounts to fairly pay employees is not enough. Certain employees are also exempt from these laws, while others are not. If you misclassify an employee, even unintentionally, it could result in a violation of the wage and hour laws, which could ultimately lead to a lawsuit being filed against you. Any lawsuit is going to be destructive for your business, but those involving wage and hour claims may deter desirable employment candidates from working for your business. A business lawyer can advise on the appropriate payment structures, wage and hours laws, and help you implement effective policies and practices.
Our California Business Lawyers can Protect Your Business From Lawsuits
Starting a business is an exciting time, but there are also many legalities to think of before you even start thinking about serving customers and clients. At Klein Law, our Santa Monica business lawyers have the necessary experience to help. We understand the potential lawsuits businesses face every day, and will effectively protect your business from litigation. Call us today at (310) 295-2261 to schedule a free consultation with one of our skilled attorneys and to learn more about how we can help your business.
