Litigation Risk

When we talk about “litigation risk,” we’re basically asking, “How likely is this person or business entity to get sued?” While there’s always a chance that any one of us and/or any one of our employers could be sued, some industries (and individuals, frankly) are a lot more likely to face lawsuits than others. Doctors and hospitals, construction companies, and timeshare organizations, for example, get sued a lot. In other words, they have a high litigation risk.

And they know this, which is why they and other companies almost always have something about dealing with litigation lined out in their operating procedures. In fact, if the company is publicly traded, this is a requirement.

For example, maybe our company has a mandatory arbitration process to deal with disgruntled employees. Or maybe we have a policy that, if our organization is sued for less than $100,000, we settle out of court and avoid costly trials and legal fees. Organizations are all about mitigating risk, so if they know they’re prone to lawsuits, it makes sense that they’d put measures in place to minimize its effects on the business as a whole.