Excessive litigation in the U.S. has created significant costs for business owners, workers, and consumers as well as the overall economy. According to the National Federation of Independent Businesses (NFIB), frivolous lawsuits filed against business owners have created a climate of fear for small businesses in the U.S. While some claims have merit, the majority do not. Unfortunately, these types of lawsuits are a growing problem for all companies, but small business owners are at a greater risk than most. Business owners that are the target of lawsuits still have to defend themselves which is costly.
What is the rationale for filing frivolous lawsuits against small businesses? The owners have the means to pay out lucrative settlements; a small business owner is more likely to agree to a settlement, avoiding legal fees that come with litigation. According to the NFIB, small businesses pay an estimated $35 billion each year out of pocket to settle such claims.
Therefore, business owners need to be aware of the threat of being sued as well as the financial risks that go hand in hand with frivolous lawsuits. If not handled properly, these risks could result in the loss of business assets as well as personal assets. In order to prevent a financial disaster, business owners need protection from lawsuits that can, not only cause massive damage to their company, but also have a disastrous effect on their personal finances, as well.
Protecting your business assets from future lawsuits
The issue of how to handle frivolous lawsuits should be of tantamount importance to all business owners. The best way to go about protecting your business as well as your personal assets is to consider asset protection plans. These often include the use of domestic and international legal tools including LLCs and asset protection trusts.
The goal of a comprehensive asset protection plan is to prevent and/or significantly reduce the risks to your business by protecting your business and personal assets from the claims of creditors and from frivolous lawsuits. An asset protection plan uses legal strategies that are put into place before a lawsuit or claim arises. Once in place, the plan can deter the potential claimant and/or help prevent the seizure of your assets after a judgment has been rendered.
Plan now for protection later
There are a variety of legal structures that can be used in asset protection planning such as corporations, partnerships, and asset protection trusts. Different business types have different types of assets that are susceptible to claims, so this will require creating and implementing an asset protection plan that takes into consideration all aspects of your business.
If you’re a business owner and want to protect your business from costly lawsuits, you should seek the services of an asset protection lawyer for business owners that can work with you to develop an asset protection plan that is best for your business. This can include business insurance options, domestic and foreign asset protection trusts, LLC’s, corporations, and limited partnerships.
Jeffrey Verdon, business asset protection attorney in California, has been providing proactive business risk management and risk mitigation strategies to business clients for more than 30 years. Contact the Jeffrey Verdon Law Group for advice you can trust.