Legal Foundation's Milito Helps Small Business Owners Stay Out of Court

Beth Milito, senior executive counsel of NFIB's Small Business Legal Center, had some shocking statistics for attendees of her "Stay Out of Court" breakout session today. "The tort liability price tag for small business owners is $88 billion a year," Milito said. "With the dramatic rise in the cost of lawsuits, it's no surprise that small business owners surveyed for the NFIB Research Foundation's Small Business Problems and Priorities survey indicated that they are concerned or very concerned about the prospect of getting sued."

The thought of getting nailed with a lawsuit is a terrifying prospect for anybody, let alone a small business owner trying to run an enterprise on a tight budget. And with 94 percent of all lawsuits being filed in the United States,taking action to prevent your business from becoming another legal
statistic is more important than ever. Fortunately, there are things you can do to protect your business in case you find yourself on the defender's side of a lawsuit claim. Here are a few tips Milito offered NFIB members in her breakout session:

• Incorporate your business. "Going alone often provides poor asset protection and poor tax benefits," Milito explained. "This sounds simplistic, but most businesses start out as a sole proprietor or a partnership. As you take on employees you may want to consider changing your business structure."

• Know the law. If you find yourself in the middle of a lawsuit claim, ignorance is no excuse for breaking the law--and in fact it is a good way to get sued, Milito said. Far too many businesses encounter issues with their employees because managers and supervisors are ignorant on the basics of good personnel practices. Take the time to make yourself aware of your state's protective categories for employees.

• Maintain adequate insurance. If you've had the same broker for years, take the time to sit down and review your policy as your business changes. "It's so hard to get small business owners to come in and look at their policy, but it's so important," said Brenda James, and attendee of the session who owns an Ohio-based insurance company. "If you haven't done that, please take my advice and review your policy."

• Manage fairly and wisely. Although discrimination charges increased again in 2007, Milito says they can be avoided by hiring well in the first place. Require all job applicants to fill out a standard job application, and only ask questions that are related to the job description.

•  Prohibit harassment. You can be sued for a "hostile" work environment--even if you are not personally involved in a harassment claim. Provide all employees with a copy of your company's anti-discrimination policy, Milito said.

Milito's breakout session drew a packed house of concerned business owners, who asked a number of questions about their legal concerns, and offered each other sage advice on staying out of court. For more information about NFIB's Small Business Legal Center, visit www.NFIB.com/legal.