Every small business' worst nightmare is being sued for big bucks. However, there are proactive steps that every business owner can take to make this nightmare completely preventable. 

Retain a Business Lawyer

First on the list is to retain an experienced lawyer who provides general legal services. A lawyer can help from the very beginning of your business by explaining the different types of business formation and recommending the option that best suits your needs. Certain types of businesses can help shield you from personal liability and provide a favorable tax structure. 

Create Clear Policies

Many litigation cases are the result of poor communication. Before conducting any type of transaction with another party, talk to your general legal services lawyer. A lawyer can discuss what you are hoping to achieve with a transaction and ensure that all contracts truly reflect the agreement between the parties. Employment policies should indicate clear rules regarding attendance, non-discrimination, advancement opportunities and other aspects of the employment relationship. A business lawyer can explain legal requirements and ensure that you have policies that are compliant with these laws. Service contracts can include clear language regarding the timing and method of delivery of goods or services. They can also contain language regarding what will happen in the event of non-delivery, late delivery or a breach of the contract.

Consider Litigation Alternatives

If litigation appears imminent, consider alternatives. Attorney Jake Posey noted, mediation is an effective alternative to litigation that keeps the power to resolve the issue with the parties instead of handing it over to a judge or jury. The parties work together on possible solutions to their problem in an attempt to resolve the problem and retain a good relationship. Arbitration allows the parties to shortcut the judicial system by getting a professional arbitrator of their choice to resolve the matter, usually much faster and less expensive than litigation.