If you’re running a small business of any kind, then much of your time might be spent identifying potential opportunities, and potential sources of risk. Among the most damaging kinds of risk are those that stem from legal liability. If you’re found to be responsible for an avoidable harm being suffered, then you might not just suffer the legal costs – the reputation and standing of your company might also be damaged.
But how can we minimise the likelihood of this happening? Let’s take a look at a number of steps we might take.
Identify Potential Risks and Liabilities
Any worthwhile strategy for the reduction of risk should start with a risk assessment. Think about the kind of risk to which you’re vulnerable, and then work backwards to establish the process by which this risk came to be.
You might start by imagining that a member of the public has slipped and injured themselves while navigating your restaurant. Then, to reduce this problem, you might think of simple procedures that can eliminate the hazards that might cause this to happen.
This technique is called a premortem analysis, and it’s among the most practical forms of risk assessment. It can be applied to many different categories of risk, including employee complaints, customer complaints, and liability stemming from a product or service.
If you don’t conduct a risk assessment in the right way, then you might find yourself incapable of dealing with the risks that you’re faced with. Risk assessment should ideally be an ongoing, regular process, however – and this goes especially if you’re operating in a complex, evolving industry, like tech.
Ensure Adequate Insurance Coverage
While you might take a number of steps to reduce the likelihood of something bad happening, it can be very difficult (or impossible) to reduce this likelihood all the way down to zero. For this reason, there will always be a role for insurance.
Insurance comes in many different kinds. As an employer, you’re only legally required to have one of them. This is Employer’s Liability Insurance, which will protect your business when a member of your staff claim that they’ve suffered an illness or injury as a result of their work. If you don’t have this form of insurance, you could face a daily fine of £2,500 – even if no action is brought against you by employees.
There are other kinds of insurance you might consider, too. These include contents insurance for equipment, and Public Liability Insurance, which works in a broadly similar way to Employer’s Liability Insurance, except that it extends to action brought against you by members of the public, rather than just your workforce.
Create Clear Contracts and Policies
One easy way to avoid disputes and friction is to make sure that any agreements you make are spelt out in writing. The more clearly that contracts are drafted, the less scope there will be for misunderstandings. Contracts like these will minimise the uncertainty, making disputes less likely. But they’ll also allow you to get disputes resolved that much more quickly and easily.
It isn’t just contracts that allow you to communicate your wishes. This can also be done through the broader culture of the business, and through specific documents, like employee handbooks. When your employees understand exactly what you’re trying to achieve, and when they can articulate a given policy in the same way you would, they’ll be much less likely to act in a way that’s detrimental to the company as a whole.
How to Handle Claims Effectively
So, what should you do when legal action is taken against you? However many precautions you’ve taken against this possibility, it’s still a good idea to think proactively about how you’ll respond to a claim.
This might mean arranging legal representation before you need it. No-win, no-fee solicitors might act on your behalf in response to a personal injury claim, for example. The advantage here is that the merits of a case will be assessed largely before it arrives in court, which will help you to minimise costs for both parties.
For small businesses, this arrangement is particularly advantageous, as it will alleviate some of the financial pressure that comes with this kind of case. If your solicitor doesn’t believe that they can win a case, then they won’t take it up. If they think that it’s winnable, the chances are almost certain that they’ll win it – and you’ll be spared the financial and reputational problems that come with this form of legal action.
