One in ten companies faced “bet the company” litigation during the prior year according to a study by Alix Partners. For small and medium sized companies, a single lawsuit can deliver a devastating, and even a deadly financial wallop in legal expenses, time lost, stress and reputation damage. Having to defend yourself and your business in court, even if you believe you will prevail, can put your company and your livelihood on the line. And there are plenty of players out there that know it and make it their business to exploit that vulnerability.
The best way to avoid being in that position is to actually AVOID being in that position. Vetting and researching potential business partners, investors, clients and even vendors is sensible and essential best practices, no matter what business you are in.
As business people we take all kinds of measures to protect against a “Bet the Company” situation. We have attorneys draft and review our contracts, we take out insurance policies, we set up company policies and procedures and safeguard our livelihood. And then we get into deals and contracts with partners and vendors and we cross our fingers.
Wait, what? Cross our fingers? Crossing your fingers is highly overrated!