Your Business is Being Sued? Here's What You Should Do

From financial repercussions to reputation in market, one can't know how badly it could affect you and your business

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Imagine, for a moment, one of your suppliers’ contracts fall through and he/she drags you to the courtroom or an employee sues your company for the non-payment of salary/dues. Somehow you find yourself stuck amid lawsuit troubles and much more. But a keen awareness of corporate laws can save you from being sorry later.


Besides a lot of business investments that entrepreneurs make, today they devote a portion of their budget on legal defence. Be it small, medium or large scale business, financial hits of litigation can be a lot more damaging than you could expect. From financial repercussions to reputation in market, one can’t know how badly it could affect you and your business.

Talk about Indian or international scenario, a steep increase in the number of lawsuits is an alarming call for the whole business community to be aware of measures you should take to stay safe.

Entrepreneur India spoke to a few legal advisors and corporate lawyers on how companies can best protect themselves from legal disputes.    

Maintain a Compliant Atmosphere in the Organization

To avoid legal battles, a compliant atmosphere in an organization is very important. Be it employees or partners, companies should ensure everyone is adhering to the laws and legal clauses, as sometimes an informal way of functioning can lead to a major hassle for the business owner. "If a case has been filed against your company, the first and foremost priority should be to make negotiation with the party. If it is something that can’t be dealt with, then only the next move should be taken by an employer," said  Shantanu Sahay, Partner, Anand and Anand Advocates.

Emphasizing on the importance of all the facts in place for a corporate lawyer to fight a legal dispute, Sahay said, “Hiding any sort of facts related to a case can worsen the condition of the dispute. Therefore, companies must aware the lawyer about each and every incident that has connections to the case, whether it stands on right or wrong perspective according to you.”   

Insure your Business

Take the right steps to reduce the financial repercussions on both your personal and business finances. Incorporate your business in a way that shields your personal finances from any legal claim, and obtain the right business insurance coverage to protect your company's finances. For example, general liability insurance protects you for a range of potential claims against your business, such as someone slipping on your property or accusing your business of false advertising. Specialized liability policies can be designed around the unique needs of your business, when necessary, advise lawyers.

Be Careful with the Terms and Conditions You Make

Most of the companies are stuck with legal disputes because of the breach of terms and conditions they make in the agreements with other parties. Be it business partnerships, job agreements of employees or anything else, companies should be very careful about their legal framework with associated parties. Corporate lawyer, Adishree Mishra, who works with a Delhi-based law-firm, said, “Companies must be aware of all the legal aspects before filing any agreement as it can save them from the lawsuits filed upon them. For that, they can hire a legal advisor who could help the company with his/her expertise in the matter.”

Komal Nathani

Written By

A firm believer of hard work and patience. Love to cover stories that hold a potential to change the momentum of business world. Currently, a part of all-women web team of Entrepreneur’s Asia Pacific edition to jig the wheel of business journalism!