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Litigation has a widespread ripple effect that can negatively impact all aspects of your business – especially if you’re a small business. Even if you secure a favorable outcome, you’re bound to experience some losses. Although the cost accounting used by many publicly traded businesses makes it difficult to attribute a specific value to the impact of litigation, one Depaul Law Review analysis estimates litigation eats into a significant portion of profits, with some of the largest Fortune 200 companies spending nine figures annually on legal fees and related expenses.

Because you can lose even if you win litigation, enacting effective preventative measures to avoid litigation can be essential to protecting your business.

Common Causes of Commercial Liability Cases

• Negligence: Failing to uphold the duty of care owed to customers or employees, resulting in harm or injury, constitutes negligence. An example would be litigation stemming from an injury caused by dangerous conditions on your commercial property.



• Product Liability: Defective products (such as those with inadequate warnings or instructions) that cause injuries could make your business vulnerable to litigation.

• Breach of Contract: Violating a contract, including a contractor failing to deliver goods or services as promised, may constitute an actionable breach of contract.

• Professional Malpractice: Negligence or misconduct by your employees or contractors to meet the standard of care expected of them may rise to the level of malpractice. While liability insurance can protect you, you may still incur litigation costs.

• Employment Practices Liability: Discrimination, harassment or wrongful termination may lead to claims brought by wronged employees.

• Intentional Torts: This is an umbrella term for intentional and harmful wrongdoing, such as fraud, defamation or interference with business relationships.

• Cyber Liability: Data breaches, unauthorized access or theft of sensitive information due to inadequate cybersecurity can expose businesses to liability, especially if an employee was responsible via negligence or intentional actions or the business failed to meet regulatory requirements.
  
  
• Fraud and Misrepresentation: Businesses can be held liable if false statements or deceptive representations of facts lead to financial harm.

• Defamation: Although individuals are usually sued for defamation, some forms of business speech or the speech of employees in a professional capacity can open businesses to liability. Businesses can be the target of defamatory remarks and may bring these claims.

• Third-Party Liability: Third-party liability means different things depending on the context. In terms of business liability, it often arises in workplace accidents where an employee injured by the actions of another business, contractor or individual sues the responsible third-party in addition to seeking workers’ comp benefits.

The Effects of Litigation on Businesses

Financial Damage

The extensive costs involved in litigation can have a harmful impact on your business’s bottom line. Even if you have a litigation fund, delays in court can easily cause one case to overrun your budget, bleeding into your other resources. Litigation may also trigger increased insurance premiums for small businesses, especially if you’re found liable in the liability claim.

Reputation Damage

Litigation can jeopardize your company’s reputation. Because court proceedings are usually a matter of public record, sensitive information about your company – including your finances – can become available to anyone interested in looking. There’s also a potential for negative press and sensationalized social media backlash, which can harm your brand image and negatively impact your relationships with customers and business partners.

Operational Disruption

Going to court involves diverting time and resources away from your business’s day-to-day operations. Employees may be pulled away from their duties to participate in prolonged legal proceedings, which may not only cost you money but hinder productivity, setting back progress and delaying production timelines.

Can You Avoid Litigation?

There are numerous measures businesses can take to lower their risk of litigation, including regular audits, thorough employee training programs and having contracts reviewed by skilled business litigation attorneys. You can learn more about preventative measures companies can take to avoid litigation in our blog here[1] .

That said, there may be situations in which pursuing litigation is still your best (or only) course of action, whether you’re the claimant or the defendant. For instance, in a breach of contract claim, a favorable outcome in court could mean the offending contractor could be ordered to fulfill their contractual obligations in addition to paying you compensation for losses resulting from the delay. In this scenario, litigation or an alternative form of dispute resolution that leads to a settlement may be the only remedies.

Whether you’re negotiating, litigating or exploring alternative avenues for dispute resolution, we’re here to help.

Have an Experienced Atlanta Business Liability Defense Attorney on Your Side

The attorneys at the Law Office of Cameron Hawkins have a record of success representing businesses in a variety of legal settings and will work hard to increase your chances of a favorable outcome. Our team will fight tirelessly for your business, strengthening your case with straightforward evidence and advocating for your interests in negotiations and in court.

Schedule a complimentary case consultation with one of our skilled attorneys today by calling (678) 921-4225 or exploring our practice page.