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How many ways could litigation impact your company?

On Behalf of | Jun 7, 2023 | BUSINESS & COMMERCIAL LAW - Business Litigation

As a business owner, you probably know that a legal problem could arise at any time. An employee could threaten a discrimination lawsuit, or an associate may claim you violated a contract term.

You may understand that litigation could harm your company finances, but that is not the only way a lawsuit might affect your business. For some companies, the non-economic consequences of litigation are just as harmful as the economic effects.

Loss of reputation

Maybe neither you nor anyone in your business did something wrong, but the consumer public may not see it that way. They may decide the mere suggestion of wrongdoing is enough to abandon your company. Unfortunately, the loss of good business standing in your community may be a risk even if you prevail in the lawsuit.

Loss of business relationships

Do you work to reduce your liability and protect your brand? The businesses you associate with (suppliers, etc.) probably share your proactive approach. They may want to widen the distance between their company and yours if you become embroiled in litigation. This could put your supply chain and other operating necessities in jeopardy.

Loss of employees

Unfortunately, employee-initiated discrimination lawsuits are among the greatest risks 21st-century businesses face. If a worker resorts to litigation to correct a perceived wrong, you may lose other employees or have trouble recruiting new ones. Since Federal and Kentucky employment laws are complicated, it is easier than you might think to violate worker rights.

Your goal may be to prevent litigation, and that is generally wise. However, ensure that you are not harming your business even more by giving in to unreasonable demands. In many situations, speaking with someone who can provide knowledgeable guidance may help you choose the ideal way to resolve a dispute.