The Impact of Litigation on Small Business

Litigation-on-Small-Business

If you have a small business, litigation lawyers will tell you it is absolutely essential to take out insurance against litigation. You may think that litigation only happens to other people and it is not likely to happen in your business, but this is not so. Accidents can happen to anyone at any time and if someone on your premises or on your payroll is injured or worse, litigation is likely to be the outcome.

In fact, even if you do have enough insurance to cover the costs involved in a litigation suit, there are many other factors involved that money cannot help.

    • The emotional cost. Stress is something that everyone has to deal with, but there is good stress and bad stress. Good stress helps you to get things done on time; bad stress is stress that goes on for a long time and can cause your health to break down. It can interfere with your time and focus, so that business decisions are difficult to make and you may not choose the best options for your business. The emotional cost can also impact your relationships, as you don’t have the emotional energy left to invest in them.
    • The cost of time. When you have to consult with lawyers and go to court, it takes a great deal of time. Many litigation cases go on for months. This is time spent away from your business. So all those business chores you are responsible for must either wait for your attention, or be delegated to someone with less expertise to handle the best way they can. This can cost the business in terms of lost contracts and poor decisions.
    • The cost of lost reputation. Many litigation cases come to the attention of the media and certainly, it will become known in business and be discussed social circles. Being innocent is not always enough to prevent gossip and innuendo. People often think, where there is smoke there’s fire. This loss of reputation can even put you out of business, or if not, take many years to recover from as customers leave you.
    • Loss of staff. Many people tend to jump from what they perceive as a sinking ship. They don’t want your now poor reputation to reflect on their own. If your key staff leaves, your business will find it difficult to meet the deadlines for work, contracts or whatever else it is you do. Then you’ll have the added expense of training new staff and waiting until they are up to speed to regain your business efficiency. Plus there is the difficulty of finding staff that want to work in your business.


For all of the above reasons, it is wise to put into place all the necessary procedures that are needed to ensure litigation is not likely.

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