Starting up a new business can be both an exhilarating and terrifying event. Many small business owners note that one of the more challenging aspects of running a business is the legal regulations that govern all aspects of business, including forming the business as a legal entity, treatment of employees, handling funds, contracts, selling goods and services and maintaining business premises.
Small businesses in Connecticut and across the U.S. are particularly vulnerable to lawsuits and suffer the costs when they do have to litigate. Small business owners can benefit from the guidance of an attorney to help prevent some lawsuits or mitigate the impact when lawsuits do happen.
Lawsuits Impact Small Businesses
According to Tort Liability Costs for Small Business, a 2010 study conducted by the U.S. Chamber of Commerce's Institute for Legal Reform, small businesses paid $105.4 billion in expenses related to lawsuits in 2008. When researchers added malpractice suits to the equation, the amount rose to $133.4 billion. Of the money small businesses spent, $34.6 billion were out-of-pocket expenses, not covered by insurance. Small businesses bore 81 percent of the costs of business tort liability costs for the year.
The study anticipated that the cost of lawsuits for small businesses would increase in the future.
Why Hire a Lawyer?
With all the money that small businesses are paying in legal matters already, engaging the services of an attorney when they are not faced with a lawsuit may seem like a luxury these businesses cannot afford. When business owners choose to handle legal matters themselves, they may believe they are saving hundreds or even thousands of dollars. The do-it-yourself option may seem particularly attractive now that so much legal information and so many legal forms are available to people online.
However, business owners may end up costing themselves far more money than they saved in legal fees when they find out they handled a legal matter improperly and lawsuits arise from it.
Experts suggest that business owners use the services of an attorney for at least the following:
- Filing business formation documents
- Human resources issues
- Partnership agreements
By paying a little money up front to have a lawyer review certain aspects of their businesses, small business owners can save a lot of money in the long term by reducing the number of legal problems the business may have to face.