Business lawyer in Los Angeles
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Many people are surprised to learn how common it is for a business to close, not because of bad management, client service, or a bad product, but rather, because of litigation.  While you cannot preclude a third party from suing your business – even if the lawsuit is frivolous – there are specific actions you can take to protect you and your business from significant civil liability.  Here are specific tips on how to protect yourself:

Include an Indemnification Clause in Business Contracts 

In many types of business agreements, an indemnification clause is included to cover issues in connection with third party claims that may be against the party you are contracting with, but somehow drag your business into the litigation.  An effective indemnification clause will list the types of scenarios where a party to the contract accepts responsibility when something goes wrong. This list may include issues such as:

  • Intellectual property infringement;
  • Product liability; and
  • negligence;

Include Limitation of Liability Clauses in Business Contracts

In many instances, a limitation of liability clause will work in concert with an indemnification clause in a business contract. As the name implies, a limitation of liability clause will effectively limit the total amount of exposure if a judgement were to be entered against your business, and the types of liability that will be covered.  Basically, this means that you can limit the amount that your company could be held liable at a specific dollar amount and exclude certain types of damage awards such as punitive or consequential damages.

Include an Attorneys’ Fees Provision for the Prevailing Party

Having a provision that provides that the prevailing party in a contract dispute can recover its attorneys’ fees can be a double-edged sword.  But, if you are entering into a contract with a party that has a reputation to be litigious, this provision can be used to your favor.  Litigious parties will often think twice about pursuing a weak or frivolous lawsuit for strategic reasons if they know that losing the lawsuit would require them to pay the other party’s legal fees as well.  

Purchase Liability Insurance

Purchasing liability insurance coverage is a prudent decision to protect yourself financially if the company is subjected to a civil lawsuit.  There are an array of different insurance policies you could purchase, depending on your particular business.  Though, bear in mind the fact that most liability insurance policies have specific requirements to ensure you have coverage, such as reporting incidents on time. Make sure you comply with these requirements, so your coverage is not jeopardized.  

Speak to an Experienced Business Lawyer in Los Angeles Today 

As you can see, it is possible to limit some of the exposure you and your business have to certain types of potential civil liability, but these protections require action and strategic planning. Hence, it is in your best interest to work with an experienced business lawyer in Los Angeles, to ensure you are doing everything possible to protect your company.

For further information or to schedule an appointment with the highly reputable and experienced business attorney Afshin Hakim of Hakim Law Group please contact HLG at 310.993.2203 or visit to learn more.