It is an experience many will face. The rain is coming down and water is pouring in through a leak in the roof. It has been known about but left for some time. You berate yourself for not getting around to it, as now it is too late.

The result - crisis management mode, with more time, effort and cost to resolve the problem than it would have if the roof had been fixed when the sun was shining.

Taking care of your business is much like taking care of your home.

In our experience, the best businesses work with their lawyers to plan for legal problems that might arise. It saves the business avoidable hassle and can also create a more attractive opportunity for potential purchasers.

Here are our top 10 things to think about to help protect your business:

1. Shareholders’ agreement

It is surprising how many businesses with multiple shareholders don’t have a shareholders’ agreement in place. We would always advise such companies to have bespoke articles of association and a shareholders’ agreement.

All companies have articles of association which are required from incorporation and the standard form of model articles is usually adopted. These act like the company’s rule book and are a public document filed at Companies House. A shareholders’ agreement is a private document between the shareholders which contains further details about how the company is run, and their interests protected.

Many companies, especially those with multiple shareholders may want to adopt bespoke articles of association which works alongside a shareholders’ agreement. Provisions include how board meetings are held, how dividends are declared, any veto rights and provisions for departing shareholders. A well drafted shareholder’s agreement can help reduce the chance of litigation and enable shareholders to resolve problems quicker.

2 Data protection

The mere sight of the acronym GDPR frightens many business owners. The important thing to remember here is to have a robust privacy policy in place so that anyone you hold data about (data subjects) know why you have the data and what you propose to do with it.

In the worst-case scenario, have a procedure in place to deal with it for example a data breach must be reported to the regulator the ICO within 72 hours. Check to see if you have an insurance policy at risk that covers cybersecurity and / or a data breach.

Have a process in place if an individual exercises the right of access to obtain copies of personal data (information). There are strict time limits of 30 days to respond, although that can be increased to three months.

3. Document retention plan

Have a document retention policy in place. Business owners are quick to keep the receipt from the £5 of petrol put in the car to claim the VAT back but don’t always realise that there can be consequences such as fines and disadvantages in litigation if documents aren’t retained correctly. What do we mean by documents? Documents such as emails, electronic files, voicemails, letters and other correspondence and online postings.

It’s also sensible not to encourage the use of informal messaging about conducting important company business. In certain circumstances WhatsApp message may be disclosable if an individual was to make a subject access request and WhatsApp messages aren’t easy to retrieve from employees particularly if there are a lot of employees.

4. Social media policies

There are lots of great reasons to use social media such as business development and other marketing activities. The down side of social media is that there are examples of when an employee has made an ill-judged comment online via social media which has then tarnished the well-earned reputation of the employees employer. Sometimes confidential information passes through social media. It is sensible to have a social media policy in place so that employees know what is expected of them and if an employee was to breach the policy it gives scope to the employer to bring disciplinary proceedings.

As eluded to above, it is sensible to have a crisis communications plan in place and a specialist media lawyer at the end of the phone.

5. Online reputation

Hard earned reputation is easily lost through gossip and mis-reporting. It’s important for businesses to monitor coverage they are receiving and correct any inaccuracies swiftly.

We live in a society where goods and services are purchased on the basis of online reviews.

Consumer businesses may wish to consider what their strategy would be in the event of receiving fake online reviews, including allegations of defamation or fraud.

6. Internal training

It is worth employers training teams about specific litigation risks for example professional services providers on the risk of professional negligence claims, breach of contract claims and claims for misrepresentation.

Also, if policies such as data protection and social media policies are to be introduced, they should be communicated to teams and explained.

Internal training and records of that training may be offered to a court in mitigation if the worst-case scenario should happen and there is a legal claim.

7. Litigation response

Some businesses take the ‘head in the sand’ approach to litigation. Often the best response to litigation is to act swiftly. It is sometimes possible to ‘nip it in the bud’ if potential litigation is dealt with quickly. Parties can negotiate a settlement to preserve a commercial relationship. Often when a head in the sand approach is taken litigation goes further down the line than is necessary.

At the very least, acting quickly shows a court that you have acted reasonably.

8. Intellectual Property audit

Many business owners don’t realise that there is monetary value in its intellectual property, the logos, the name of the business all carries value. All too often these valuable assets are not adequately protected and can risk being lost to competitors for nothing.

It is well worth businesses conducting an IP audit.

9. Contract audits

Contracts should be reviewed from time to time to ensure they continue to reflect the way your business operates, the needs of your customers/suppliers and legal requirements of the industry.

Something basic that is often overlooked is to ensure that your terms are incorporated into the contract. Having terms on the back of an invoice is often going to be too late, the contract may already have been formed and the goods delivered – get terms to the customer as soon as you can in the process such as at quotation stage, have the terms on your website and refer to terms and conditions. It is also important to ensure that you do so in a way that is sufficient to deem them as being incorporated.

10. Litigation risk analysis

It is sensible for business owners to take time aside to regularly review litigation risk and where the business may be exposed. It seems strange to anticipate being sued, and of course nobody wants legal action against them but anticipating and preventing is better than the cure.

We can work with businesses in this way to help identify areas of risk. There are also litigation risk software on the market, which we can work with you to use, that can assist businesses by creating decision trees to drive good decision making.

Conclusion

We understand that every business owner wants to be getting on with doing what they do and know best; namely, running their business.

When things are going well, it’s easy to want to simply focus on that. However, if you do put some time aside during the good spells to address and mitigate potential problem areas, it can save big headaches in the future and might help to inform better habits.

Ultimately the objective is to give you more time to focus on your business, not less. Prevention is better than the cure.