Being a nonprofit in Illinois is difficult enough, and from fundraising to maintaining legal compliance, and everything in-between, hundreds of nonprofits in Illinois struggle to keep their doors open. As such, with the introduction of a lawsuit against a nonprofit, that nonprofit might not be able to survive. One of the best tactics against lawsuits is understanding the most common types of lawsuits against nonprofits, and then implementing proactive measures so that you can minimize the chances of a lawsuit and effectively and efficiently develop protection strategies.
At James C. Provenza & Associates, Chicago nonprofit attorney James Provenza has helped numerous nonprofit organizations with their legal compliance, minimizing the chances of a lawsuit occurring. If a lawsuit does arise for any reason, attorney Provenza will be there to provide a comprehensive and aggressive legal defense. For a free, no-obligation consultation with our law firm, call us today at (847) 729-3939.
The Most Common Nonprofit Lawsuits
Just like for-profit enterprises, nonprofits in Illinois are still susceptible to lawsuits. Fortunately, if your organization has a corporation status (usually acquired through formal incorporation in the State of Illinois), then the people who work for the nonprofit are protected from personal liability. Nonetheless, the organization itself can still be liable over and above the amount that’s covered by insurance.
Theoretically, a nonprofit is susceptible to any type of lawsuit; however, in the State of Illinois, there are several specific lawsuits that are often filed against nonprofits. These lawsuits typically include:
- Contract disputes
- Employment law claims
- Personal injury lawsuits
To better understand how easily a lawsuit can arise, take the following scenario: imagine your nonprofit hired a web designer. When the web designer sends the invoice, it’s way higher than you planned for, as the web designer added a wide variety of features that you didn’t ask for. If your nonprofit cannot afford the full amount and doesn’t pay the web designer, the web designer could file a lawsuit against you. Unlike other companies, a single lawsuit over a contract dispute, such as the one described above, could be enough to shut down your nonprofit due to a lack of funds.
How to Protect Yourself From Lawsuits
Contract disputes are certainly the most common type of lawsuit that a nonprofit can face, though employment law claims (such as discrimination) and personal injury lawsuits are equally devastating. As such, whether you’re just starting your nonprofit, you had a close call, or you want to ensure a better lawsuit prevention strategy, there are certain actions you can take to dramatically minimize the risk of a lawsuit taking down your nonprofit.
Getting Everything in Writing
One of the most important strategies to protect yourself against lawsuits is to put everything in writing. Many of the everyday transactions, such as hiring a contractor or buying or renting equipment or real estate, all require more than a simple oral agreement. By putting your transactions into writing, you can establish exactly what you’re signing up for, and if the other party doesn’t do what was promised, you’ll have written evidence. A thorough written agreement might contain some of the following elements:
- General description of the project, work, etc
- Project schedule with deadlines
- Information regarding fees, prices, whether fees can change, and so forth
- Warranties of the company’s work
- The contract’s duration
- The circumstances in which the contract can be terminated
- How both parties will resolve any disputes that arise
Follow All Illinois and Federal Employment Laws
Next to contract disputes, many Illinois nonprofits have had to close their doors due to employment law claims. For this reason, it’s essential to know and follow all Illinois and federal employment laws, especially when it comes to fair employment and discrimination laws. Some common lawsuits of this nature include:
- Sexual harassment
- Wrongful termination
- Wage-and-hour disputes
To reduce instances of employment law disputes, it may be helpful to have a human resources department or, at least, implement workplace procedures to take action and resolve a dispute before it can reach the lawsuit stage.
Prevent Personal Injuries
Personal injury and tort lawsuits are rare, but when they do occur, they can be financially devastating. In general, this type of lawsuit can arrive when another individual makes a claim that your organization caused him/her physical injury, property damage, emotional distress, or damage to his/her reputation. For instance, if you’re hosting an event and a person trips on an extension cable, breaking his/her leg, then that person might sue for personal injury.
To avoid the possibility of a personal injury lawsuit, you should always evaluate your most likely areas of risk. After finding areas of risk, develop specific ways that you can reduce that risk to limit your exposure to legal trouble.
Protect Yourself With Attorney Provenza. Call Now!
Lawsuits can come from any corner, and in some cases, no matter how prepared you were, your organization could still be held liable for some unfortunate situation. Remember, it’s impossible to make your nonprofit immune to a lawsuit, and so you should always have insurance optimized for your nonprofit.
Furthermore, you can always benefit by having an experienced and knowledgeable Chicago nonprofit attorney at your side. At James C. Provenza & Associates, we’ve helped many nonprofits with their legal compliance, tax-exempt status, and more. To speak with attorney Provenza about your nonprofit, call our Chicago law firm today at (847) 729-3939.