Protecting Your Business

Any business is exposed to lawsuits. Partners, terminated employees, dissatisfied customers, unhappy vendors all can have you in their sights. The fact that you’re not negligent or haven’t acted improperly doesn’t guarantee that you won’t be sued, or if you are sued, that you’ll win the case. Juries often side with individuals in cases against a business, as they see it as a small cost to the company.

Klueger & Stein’s inventory of strategies to protect your business include incorporation, limited liability companies, estate planning and various types of trusts. With our broad experience, we custom-design the strategy that fits your business and circumstance best.

A Case History: Building Protection

The company is a successful California-based homebuilder. Over the past few years, following many construction defect lawsuits, the firm found it more and more difficult to carry liability insurance. Coverage was just too expensive. Eventually, the decision was made to stop carrying insurance coverage altogether.

Without insurance coverage, the company-and possibly its owners-was exposed to future lawsuits. Asset protection for the company and its owners was the best alternative to insurance coverage.

The company’s operations had to be restructured so that the liability arising out of any one building project would reach only a limited amount of the company’s assets, if any. A separate legal entity was established for each construction project. Their protection was enhanced further by having different entities own the real estate and do the development work.

An additional layer of entities further insulated the individual owners from the liabilities of the business. The ownership of the personal assets of the owners was further restructured.

In its first test, this protective structuring worked as planned-seeing the level of protection it faced, the plaintiff dropped a potential class action lawsuit and accepted a surprisingly low settlement offer.

Posted in: What do you want to protect?