The Top 10 Legal Risks Businesses Face Today

Running a business means dealing with a range of challenges, and legal issues are among the toughest. They can hit your wallet hard, hurt your reputation, or even force you to close up shop. Fines, lawsuits, and disputes pop up more often than you’d think. The key is spotting these risks early and taking action.

I’ve compiled a list of the top 10 legal risks most businesses face, based on what experts are seeing. For each one, I’ll give a real-world example to show how it plays out.

1. Regulatory Compliance Risks

Governments continue to add regulations, particularly in the areas of the environment, finance, and industry standards. Falling short can result in significant fines or shutdowns.

Example: A manufacturing company improperly discards waste and faces millions in penalties from environmental regulators, along with orders to clean up the mess.

2. Employment and Labor Law Risks

Disputes over pay, discrimination, harassment, or wrongful termination are common and increasing.

Example: An employee sues after being terminated shortly after complaining about unequal pay compared to coworkers performing the same job, resulting in a costly settlement.

3. Contractual Disputes

Poorly drafted contracts or failure to deliver on promises can lead to disputes with suppliers, clients, or partners.

Example: A supplier delivers goods late, causing a retailer to miss sales and resulting in a breach claim and lost profits.

4. Data Privacy and Cybersecurity Breaches

Losing customer data through data breaches or weak security can trigger fines and lawsuits under laws such as GDPR and state regulations.

Example: A retail chain suffers a cyberattack that exposes the credit card information of thousands, resulting in government fines and class-action suits from affected customers.

5. Intellectual Property Infringement

Copying someone else’s trademark, patent, or idea—or not protecting your own—leads to expensive court battles.

Example: A small tech firm uses a logo that is too similar to a big brand’s, resulting in a cease-and-desist and paying damages to avoid trial.

6. Tax Law Violations

Mistakes in filings, payroll taxes, or international dealings can lead to audits and penalties.

Example: A business underreports income to reduce taxes, is caught in an IRS audit, and owes back taxes plus heavy interest and penalties.

7. Litigation and Dispute Risks

General lawsuits from customers, competitors, or others over products, ads, or negligence.

Example: A customer slips in a store due to a wet floor without a warning sign, sues for injuries, and wins compensation for medical expenses.

8. Corporate Governance and Entity Structure Issues

An improper setup or poor records can allow creditors to pursue owners personally.

Example: In a partnership without proper limits, one partner’s bad debt can allow creditors to seize the other partner’s personal assets.

9. Insurance Coverage Gaps

Not having the right policies leaves you exposed when something goes wrong.

Example: A fire damages a warehouse, but the policy excludes specific causes, forcing the owner to pay repair costs out of pocket.

10. Partnership and Succession Risks

Fights between owners, or a lack of a succession plan for when someone leaves or passes away, disrupt everything.

Example: Two partners disagree on selling the business after one wants out, leading to litigation and operations grinding to a halt.

These risks often overlap. A data breach can trigger regulatory fines, lawsuits, and reputational damage simultaneously.

How to Handle These Risks

The best move is spotting problems before they blow up. Conduct regular reviews of your operations, contracts, and policies. Train your team and review insurance often.

One solid option is LegalSafe. It’s the top tool for assessing legal risks, powered by TalkCounsel. TalkCounsel connects you affordably with remote attorneys, and LegalSafe uses smart tech to scan your setup for weak spots. It provides clear steps to resolve issues, making it easier and more cost-effective than traditional methods. Many find it helps them stay ahead without incurring significant legal fees.

Head over to LegalSafe.org to run a check and keep your business safer. It’s worth it for peace of mind.