Small Business Lawsuit Statistics: Know What You Can Be Accused Of

As a small business owner, there’s no greater feeling than seeing your hard work pay off with the success of an independent venture. 

But sometimes that same independence can lead to problems – like legal troubles and lawsuits. Knowing the statistics for small business law lawsuits is one way to protect yourself from potential danger or take necessary steps if it comes up as an issue in your organization. 

No one ever wants to face any type of lawsuit, but having the facts on hand will give you the best chance possible of coming out ahead. 

Let’s take a look at some small business lawsuit statistics and how taking some simple precautions can help mitigate any losses due to litigation.

Small Business Lawsuits Statistics

  • Every year, small businesses are sued to a range of 36% to 53% according to SBA.
  • 43% of small businesses have been threatened with a lawsuit.
  • Each case could cost up to $150,000, especially if it goes to trial.
  • At some point in their lifespan, 90% of all businesses face lawsuits.
  • Since 2013, there has been a 320% rise in ADA lawsuits.
Small Business Lawsuit Statistics

5 Tips to Protect Small Businesses From Lawsuits

1.Write It Down and Keep Your End of the Deal

Jane Haskins Esq, a contributor, offers one of the best tips for protecting small businesses from costly lawsuits: document everything. 

For each transaction, send out an email or some other form of record that details what was agreed upon. This includes essential information such as prices, delivery dates and any services/products promised. 

Contact a company lawyer for advice on the contracts you should use in certain situations. Ensure that your agreements are adhered to and promises made are fulfilled – this is a surefire way to prevent potential disputes that could lead to litigation.

2.Hire an Attorney

Thehartford suggests hiring an attorney to protect small businesses from legal risks. This approach gives access to expert advice on how to handle real-life matters should a lawsuit be filed against your company. 

While it can be expensive, not having an attorney can prove to be even more costly in the long run. 

A simple example of this is when McDonald’s faced a lawsuit in 1992 due to hot coffee causing injury – a case that ended up costing them millions. There are other potential legal risks as well such as copyright and IP infringements, defective products, and slips and falls at the workplace – all of which can hamper a small business if they are unprepared.

Try studying a law firm that specializes in your field to assist protect yourself from future legal concerns.

3.Business Separation and Insurance

Keeping the owner apart from the business is, in HG’s opinion, one of the most crucial steps that small businesses can take to safeguard themselves against potential legal action. 

This helps not only to protect the personal assets of the owner, but also allows for the most competent person possible to run the company. 

It is also critical that managers and employees establish good company processes that both boost revenue and protect against dangers.

Liability insurance is often required for protection in cases where people slip, fall or otherwise suffer a mishap on the property – it should be taken into account by owners who are serious about playing it safe.

4.Stay on top of Employment Issues

According to Andrea Wheeler, an employment attorney, there are several tips to protect small businesses from lawsuits such as correctly classifying workers to adhere to government guidelines and requirements, getting contracts in place for employees and independent contractors, creating policies and handbooks to limit liability, and knowing any compliance considerations when operating a multi-location enterprise. 

Taking initiatives like these can assist business owners in preventing possible worker concerns before they become a major problem.

5. Protect Your IP

According to Trey Hendershot, managing shareholder of, the best way to protect small businesses from lawsuits is to proactively secure their intellectual property. 

Taking steps such as filing for trademarks and copyrights, implementing internal policies related to non-compete and confidentiality agreements, and licensing out proprietary information can help businesses protect their trade secrets and limit liabilities in case of litigation. 

Creating a cause of action when there is a breach in security also makes it much easier for businesses to demonstrate that they took reasonable precautions to keep the information secure, increasing their chances of avoiding claims from patent trolls or liens.





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