According to the US Financial Education Foundation, there are an estimated 100 million lawsuits filed every year in the United States. With that said, the US Chamber Institute for Legal Reform reported that litigation costs continue to increase and consume a higher percentage of corporate revenues each year. Duke Law School conducted a survey of 36 large US corporations who had faced litigation between the years 2000 and 2008. They found that between these years, litigation costs (as a percentage of revenues) increased by 78% for 14 of those companies. In 2008, the average outside cost of litigation was close to $115 million per company, representing a 73% increase from 2000 or a 9% increase each year. These figures provide concrete evidence of just how expensive litigation can be. Companies are literally spending billions of dollars per year on litigation-related expenses. Of the 36 respondents from the study, an estimated $4.1 billion was spent in total in 2008. These numbers are substantial because the companies under study were large corporations.
Large Corporations Aren’t The Only Ones at Risk
Small businesses are at significant risk, too. We live in a society where, if something goes wrong, many peoples’ first reaction is to take legal action. As a manager, supervisor, or business owner, the possibility of a lawsuit may not be high on your list of concerns, especially if your company has never faced litigation in the past. However, a US Chamber Institute of Legal Reform found that approximately 43% of small businesses were threatened with or directly experienced a lawsuit. Many of these lawsuits came very close to pushing these small businesses to bankruptcy. In fact, litigation can be much more harmful to small businesses than large corporations because often, small businesses simply do not have the resources to deal with the incredible lawsuit expenses.
How a Lawsuit Can Impact Your Company
Lawsuit costs are directly correlated with the cause of action, the decisions of whether or not to go to trial, and what the final outcome of the trial is. General expenses that are common in most cases are exorbitant lawyer fees, court filing fees, depositions, discovery, expert witness feeds, document preparation costs, and other miscellaneous costs. These direct expenses do not include emotional costs, your own sacrificed time, the threat of uncertainty, and other taxing indirect costs associated with a lawsuit. The New York Times reported that, on average, a lawsuit will cost a defendant about $1.1 million at the end of the day. For a business of small to medium size, this is considerable. Let’s look at some of the most common reasons why companies are sued.
Common Reasons Why Organizations Face Lawsuits
Customers: A client may take legal action if they are unhappy with the quality of service, feel that they did not receive what they were entitled to or that they have been misled, or suffer an injury on company property that resulted from negligence on the company’s part. Customers may also act due to discrimination, the presence of unsolicited cameras, because of a company’s denial of service claims, if they were injured or hurt while using a company product, if the product/service did not meet the standard of care, or if the company has breached a contract.
Employees: There’s a lot that can happen at the workplace and employees may sue their employer for several reasons. Some of the most common include discrimination based on gender, disability, nationality, or other prohibited ground, wage-related issues, wrongful termination, failure to follow work-related policies, an injury suffered at the workplace, and employer negligence. According to the American Employee Assistance Group, the average time to settle a claim in 2015 was 318 days. Furthermore, Bloomberg Law reported that the volume of employee lawsuits against their respective employers had increased by more than 400% in the past 20 years. Bloomberg Law also found that if an employee lawsuit is filed in federal court, the employee has a 16% chance of claiming over $1 million and a 70% of winning more than $165,000 with an average lawsuit payout being around $500,000.
These figures are cause for employers to worry, especially if they are not doing everything they can to minimize their chances of litigation. This article will now focus on what your organization can do to specifically minimize its risk of an employee suffering an injury on the job or on company property.
Being Proactive: Here’s What You Can Do
Taking proactive measures could make the difference between massive litigation fees and carrying on with business as usual. Is your company being proactive when it comes to safety? Being proactive means taking preventative measures to prevent incidents, before they occur. Learn more about the differences between proactive and reactive safety here. When we consider the substantial costs associated with litigation, companies should view safety as an investment. As discussed previously, workplace injuries are one of the single largest costs that a business will face. You can learn more about viewing safety as an investment here.
Implementing a cloud-based worker monitoring solution like Scatterling will inherently lower your company’s risk and liability exposure. Firstly, by providing your workforce with an effective tool to declare panic or detect an emergency, you will be able to respond quickly and address violence or injury in a timely manner. Check-in monitoring also allows workers to check-in periodically throughout the day to confirm that they are okay, a hugely advantageous feature for lone workers in particular. Most importantly, it does not rely on an employee’s ability to call for help, to call for help. Likewise, Man-Down and Fall-Detection motion sensors are a fail proof method of determining if a worker is hurt. Having these tools readily available to your staff will effectively minimize their risk of getting injured while on the job or on company property.
In addition to adopting a safety solution like Scatterling, your organization should conduct a regular hazard assessment to determine aspects of your work environment that could put your people at risk. Hazards exist in every workplace and depending on the field of work, some hazards are worse than others. In general, workplace hazards can be biological, chemical, physical, ergonomic, psychological, or safety hazards. Here is a more comprehensive look at the top hazards that may be found in the US workplace hazards.
If an injury does occur, the fact that your company has implemented a worker safety solution like Scatterling shows that you care about the safety of your people. This will be very positive if a lawsuit were to take place.
At the end of the day, company lawsuits are not only expensive, but they are also likely. Simply thinking that it will never be your company is dangerous because accidents happen, and one lawsuit could leave a detrimental mark on your organization. Being proactive about safety is one of the best ways you can minimize your risk.