Top 10 Ways to Get Sued

Here it is, the official, “Top 10 Ways to Get Sued” – guaranteed!

1. Do Business in Your Own Name.  The average person is sued three times in their life.  The average business person is sued every 3 years.  By doing business with the public you’ve got customers, and eventually you are going to tick someone off.  And, if you have employees, they will do the same, and you will be liable, not to mention employees claims against you personally.  By owning your business as a sole proprietor, you are begging for trouble.  For less than $100 in most states you can incorporate your business and limited your exposure.  Sure, the bookkeeping and paperwork is a burden, but it’s worth the effort the first time you are sued.

2. Open Your Mouth too Wide.  When you get into a spat with someone that might end up in a lawsuit, KEEP YOUR MOUTH SHUT.  People tend to assert their positions too loudly, ultimately prejudicing their case in the future when in litigation.  If you think you screwed up or you think someone else did, don’t say too much.  Keep quiet, and talk with a lawyer about your rights.

3. Settle Without a Release.  If you do get into a spat with someone and settle the matter, make certain you get the other party to sign a release of liability against you so they can’t come back later and sue you.

4. Own Real Estate In Your Own Name.  If you are a landlord and own real estate in your own name, you are begging for trouble.  Any claims of liability on the property will be against you personally. Consider a trust, an LLC, or both.

5. Engage in General Partnerships.  As an individual doing business you are subject to many liabilities, but as a partnership you are also subject to the liabilities of your partners.  Don’t ever do business as a general partnership, consider an LLC instead.

6. Try to Call Employees Independent Contractors.  Many employers hire employees, but call them “independent contractors”.  If someone works for you regularly and you pay them by the hour, they are an employee and should be put on payroll.  Failure to do so can expose you to a claim for unpaid wages or worse, an investigation by the IRS or state department of labor.  Don’t risk it – use a payroll service to pay them as a w-2 employee.

7. Sign a Contract Without a Representative Capacity.  If you take the time to incorporate, then make sure you sign all checks, notes, contracts, and agreements as an officer of the company.  Failure to do so even ONCE can mean personal liability.

8. Give a Personal Guaranty.  Don’t ever give a personal guaranty for a friend or relative.  Their failure to pay will hurt your credit at best, and end up in a lawsuit against you at worst.

9. Let People Borrow Your Car.  In most states, the owner of a car is liable for anything done with the car by the driver.  Make sure if you lend your car the person driving it has their own insurance and yours is adequate.

10. Attractive Nuisances.  Pools, trampolines, and other “cool things” tend to attract children, who eventually get hurt. Eliminate all attractive nuisances on your property.