No one wants to think about lawsuits, but the truth is that litigation is a very real part of doing business. From employees to clients to other companies, many parties have the potential to sue you for a variety of reasons. Some of these may be legitimate, whereas others are outlandish efforts to get money from you.

The good news is that you can mitigate the negative effects of this very unpleasant aspect of business by making smart moves.

Watch what you say

Never admit fault to the other party and attorney, even if fault clearly lies with you. Many factors are involved in the incident, and they may affect the outcome of a negotiated settlement or court ruling. Whenever you must contact the aggrieved party, do so professionally and calmly.

Receive professional guidance

Do not act until you have talked to your insurance provider, your attorney and any other professional relevant to the circumstances. Getting advice can save you from making costly mistakes. American Express shares the example of a contractor who resolved an issue by making repairs to avoid a lawsuit but without talking to his insurer first, causing him to lose reimbursement for the job because proof no longer existed.

Keep thorough records

Hopefully, your day-to-day business records are already thorough and organized to help defend your case. In addition, document everything related to the situation, whether it is photographic evidence or copies of communication. The more proof you have, the better protection you will have. Retain it all until the matter is completely over, including any appeals that may occur if you go to court.

Avoid court if possible

With proper legal representation and a cooperative approach, you should be able to come to an agreement outside of court. Taking the case to trial will only cost you more money, time and business. Unfortunately, it is sometimes necessary, so the better prepared you are, the better the outcome is likely to be.