Large or small, even the best managed companies can be sued. Business executives never intend to put themselves at risk but they often are not aware or fully understand the implications of their actions. Consider the following examples:

  • The owner of a small security firm solicited and hired a sales representative of a major competitor. The sales representative had numerous contacts in the industry and some key and profitable clients. Over the next several months, the sales rep convinced a majority of these clients to change security companies. The competitor filed suit alleging that the sales rep had improperly taken client lists, pricing and other information that it considered proprietary and confidential. A settlement was eventually reached, but not before legal fees had exceeded $100,000.
  • A security company had an opening for a supervisory position at one of their job sites. A minority security guard who had been working at that particular site for the past three years felt that she was suitably qualified for the position. When she learned the company hired an outside individual, she alleged that she was passed over for a less qualified and less experienced person. She filed suit against the officers and the security company for racial discrimination and emotional distress. After two years of litigation, the case was settled. The defendants paid the woman $85,000 and total defense costs exceeded $225,000.

No matter how groundless the charges, D&O litigation is always time consuming and can financially cripple a business and the officers involved. In many cases, the named directors and officers in a lawsuit can even be held personally liable for the damages claimed. Directors & Officers Liability Insurance which includes Employment Practices Liability (insurance against charges of discrimination and sexual harassment) can help protect you and your company from these types of claims.

Talk to us today about installing a comprehensive risk management system to help you protect your business.