Lobb & Plewe Attorneys At Law

Business lawsuits can ruin your bottom line and reputation

Building a solid reputation for your business is crucial for a company to survive and stay competitive in your industry. The trust that you build with customers and vendors will not only affect the way the public views your company, but also your company's bottom line. The more your customers trust your company, the more likely they are to continue to buy and recommend your products and services.  Unfortunately, what may take years to build can be quickly destroyed on a heartbeat, especially in the event of a messy legal dispute. 

The cold hard fact is that at some point during its operation, almost all businesses will be involved in some kind of legal dispute, whether it is a dispute over a contract, employment issues, discrimination, liability, false advertising, or misrepresentation. No matter if the dispute is large or small, it could have the effect to negatively impact your business and the representation you fought so hard to build and preserve. 

What can businesses do to avoid legal battles?

There are a number of ways that a business can avoid going through the process of litigation. The ideal situation for businesses is for them to resolve their disputes through the use of alternative methods such as negotiation, arbitration, or mediation. These processes can be conducted privately and will require less expense and time than traditional litigation. Often times business contracts will include these options as the starting point for despite resolution because of this. Yet, in some cases, disputes can not be solved with these methods, and litigation will be necessary. 

In addition to choosing other methods to resolve disputes, companies can avoid lawsuits by having proper precautions in place. This can include being cautious about who the company does business with and being careful about how business dealings are conducted. It is also advisable to have clear vendor and employee contracts that follow legal guidelines for all business dealings. 

Cons of entering into a lawsuit

There are some significant drawbacks when a company enters into a lawsuit. The first major drawback is the fact that litigation can be a costly process. Lawsuits will consume not only a significant amount of company funds, but also company time and resources. For smaller businesses, the impact can be particularly devastating. Another major drawback to lawsuits is that it can end up completely damaging the relationship with the parties engaged in it, which can have an impact on future business dealings if the lawsuit involves crucial vendors and suppliers. And last but not least, the public nature of a lawsuit can quickly damage the reputation of a company, causing the public perception to turn, if they choose to side with the other party. Even in situations where court resolutions or settlements are kept private, the initial damage from the announcement of the lawsuit in the media can have a damaging effect that may be hard to recover from. A lawsuit cannot only damage your reputation with the public but can also make other businesses hesitant to work with your company, which can mean a loss of resources vital to business operations. 

How can you restore your brand image?

In the event that your company suffers a public lawsuit or is involved in some kind of scandal, brand image can be restored, but it can be a lengthy process. The first step is to launch a communication program that will be tasked with repairing the damage caused by the suit and rebuilding the image with the public. Some ways to regain trust with a customer base is by recalling products that may be the subject of the dispute or correcting errors or problems that may be associated with it in a timely manner. It is always best to act quickly in these situations and avoid spending time denying and hiding things. When the truth comes out, denying the issue can damage trust between a company and its customers even further. 

Earning and maintaining a good reputation can be a significant challenge for both new and established businesses, which makes any negative publicity devastating. 

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