How To Protect Your Business From Financial Litigation

April 28, 2022
By Jesse Armstrong
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Are you worried that your business may be the target of an upcoming financial lawsuit? Do you think that being exposed to such a suit could have a devastating impact on your finances? If you answered yes to either of these questions, you’re not alone.

Financial litigation is a growing threat that businesses of all sizes and types need to be prepared for. With the rising incidence of fraudulent financial activities and the corresponding demand for increased regulation, the risk of being the target of a financial lawsuit has also increased. Therefore, it’s essential that you take proactive steps to safeguard your business from this possibility.

Diversify Your Assets

One of the primary ways for financial litigants to “lasso” their target is by using the threat of a financial lawsuit to leverage their access to the target’s assets. While the precise items that a lawsuit can force you to sell vary from state to state, it’s commonly understood that the most at-risk assets are real estate and vehicles. Therefore, it’s crucial that you diversify your assets so that you’re not overly dependent on any one of them.

Hire an Attorney

To avoid the risk of financial litigation, you should consult with a qualified attorney as soon as you suspect that you might get sued. The attorney can draw up a strategy that outlines the actions that you need to take to avoid a lawsuit and the defenses that you can raise if a lawsuit is already underway. An attorney can also help you find a finance expert witness that may provide evidence in your favor.

Establish Written Policies

Another good way to avoid a lawsuit is to establish and enforce written policies that address specific risks. For example, in order to avoid being sued for fraud, you should have a policy that explicitly prohibits employees from engaging in fraudulent activities on behalf of the business. It’s also essential that you have a policy that prohibits employees from providing business intelligence and other confidential information to third parties without the permission of the business owner.

Financial litigation can be scary. Even if you don’t intend to cheat the system, there are numerous ways that you could find yourself in the middle of a devastating lawsuit. However, there are also many ways that you can avoid the situation. By taking the right steps early on, you can stay out of trouble and protect your business.