Lawsuits are not something only major corporations have to deal with. Many small business owners each year end up facing some sort of litigation related to an aspect of their business. Lawsuits can be extremely intimidating for your average small business owner, as costly litigation adds up quickly. There has even been a rise in lawsuits lately in the business world. Protecting your small business in the legal world is crucial. Here are some of the most costly lawsuits you want to avoid.

Contract Disputes

Your small business can be held responsible for violating any kind of legally binding contract. This could result in your small business being held accountable in the courtroom. It’s important to stick to any contractual agreements you have agreed to. A way to avoid potential contract disputes is by not breaking contracts, so before you sign your name anywhere, be sure you have the ability and means to hold up your side of the contract.

Employee Action

In order to avoid employee legal action at your small business, you’ll need to read and understand your state and local laws surrounding this topic. Examples of potential employee legal actions include wrongful termination suits, harassment suits, etc. These are usually the most common ones employers face, but can be avoided if you’re continuously educating yourself on the applicable laws.


Fraud lawsuits can be especially worrisome. These cases tend to arise when customers are feeling misled, or treated unfairly. Retaining a legal council early on in the development of your company has the potential to derail any potential fraud suits that may arise.

Intellectual Property

One of the biggest mistakes small businesses make is infringing on other people’s’ intellectual property. If your firm is using intellectual property that belongs to someone else, you could be facing a lawsuit being held responsible for damages. Factors of intellectual property include plagiarism, copyright infringement, trademark infringement, and patent laws.

Avoiding legal action is much easier if you are staying educated on the subject. Always remember to watch what you say/sign, hire a legal counsel at the first sign of trouble, and always protect your assets.