5 ways to protect your business from a lawsuit

Avoid Litigation Business

Is your business a lawsuit waiting to happen?

Do you ever lie awake at night worrying you’ve made a mistake or missed something that’s going to land you in litigation and bring your whole house of cards tumbling down? Don’t worry, you’re not alone.

Many business owners spend countless hours worrying whether they’re operating their business on the right side of the law, or if there’s a formality or a simple mistake they’ve missed which means they’re sitting on a ticking time bomb.

Here’s a list of 5 ways you can protect your business from a lawsuit:


#1 Business structure

Either failing to consider it at all and ending up with a default sole trader structure which isn’t right for their needs, or setting up another structure which isn’t right either. Making sure your business structure is appropriate for your business and individual circumstances is critical. If you have significant assets, are taking on debt or are operating in a high-risk area (like financial or medical advice), check that your business structure protects you properly.


#2 Limitation of liability

Do you limit your liability in your contracts with your clients or customers? What about on your website? Limitation or exclusion of liability is fundamental to protecting your business from litigation. On the flip side, if you try to limit it too much, you might fall foul of the consumer protection law, meaning the ACCC can slam you with a crushing fine. It’s a fine art getting those exclusion clauses just right, and worth getting a lawyer to look it over.


# 3 Restraint of trade

If you’re buying a business or hiring staff, restraint of trade should be right at the top of your list of priorities. Have you made sure there’s a restraint clause in the business sale contract? Will it actually protect you? Think about what would happen to your business if someone in the know set up shop down the road.


#4 Confidentiality

Keeping your trade secrets and confidential information under wraps is key to running a successful business. I mean, imagine if Coca-Cola let just anyone see their recipe? Your agreements with customers, manufacturers, distributors, users, designers and employees should all include obligations of confidentiality.


#5 Finance and debt

This is a big one. Coming from a banking and finance law background, I can’t tell you how many people lose their shirts because of a business debt that has gone wrong. Understand your finances and what will happen if the market suddenly changes and you’re not able to pay your debts. A mortgage over your home might seem like a simple formality when you’re riding high, but trust me, when times get tough it’s a hard pill to swallow seeing the bank take it out from under you.


Key Takeaways

There are some simple steps you should take to make sure your business is protected. The good news? It’s not too late to make some changes! A commercial lawyer can help you to address the areas highlighted above, before you have a lawsuit on your hands.

Click here to book a free 20-minute call with Her Lawyer to help you identify the potential time bombs in your business.

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Courtney Bowie


Courtney is Her Lawyer’s founder and principal lawyer. Before starting the firm in 2017, she worked as both a lawyer and consultant in top-tier law firms. Courtney is passionate about gender equality, mental health and wellbeing, especially in the legal profession.

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