The Six
What is CoverMySix®?
CM6 is a unique legal and regulatory risk-assessment system that identifies and addresses the six areas most likely to cause legal exposure for damages, fines, and attorneys’ fees.
Those six areas include Employees, Customers, Owners, Competitors, Government and Vendors/Suppliers.
Meet the Six
Employees
Employees are usually the category with the smallest number of plaintiffs, but they have the largest number of potential claims against your business and may present the biggest risk of loss. The entanglement of local, state and federal regulations governing how you interact with your employees presents a compliance challenge for your business and can be costly if not handled with care. Written policies and procedures and consistent execution of those policies minimize the risk of liability for your business.
Customers
Businesses don’t exist to stand still—they grow, often by increasing the number of customers they service. As a company grows, their customers often become the category with the largest number of potential plaintiffs.
Businesses protect themselves from litigation with customers when they utilize good customer agreements, order forms and terms and conditions and implement airtight procedures. And, when these documents address regulatory consumer practice compliance the risk of litigation with consumers is substantially minimized.
Owners
The relationship between business partners is the bedrock of any business; this relationship is entirely contractual. Having governance documents with dispute resolution provisions decrease the likelihood of disruptive partnership disputes and allow the owners to focus on growing the business. To limit liability exposure, business owners must also adopt and follow the corporate governance documents when conducting business and refrain from commingling personal and business funds.
Further, succession and estate plans that align with the business’s governing documents will not only provide owners with additional asset and familial protections but will also minimize exposure to messy litigation between parties with ownership interests.
Competitors
Competitors present legal risks and challenges to your business in at least two areas: intellectual property and the retention of employees and customers. To maintain your competitive advantage, it’s important to adopt and implement policies and procedures that protect company’s intellectual property and help prevent infringing competitor’s intellectual property rights. Infringement lawsuits last years, disrupt your business, and can cost companies hundreds of thousands of dollars in legal fees. No business owner should overlook the necessary precautions to preserve trade secrets and prevent competitors from raiding valuable employees and customers. Adopting strong (yet enforceable) confidentiality, non-solicitation and non-compete agreements is key.
Government
Federal, state and local compliance with regulations can be cumbersome, and failures to comply can be fatally disruptive, a public relations nightmare, and costly. The government (e.g., State Attorney General, Federal Trade Commission, and others regulatory agencies) has an unlimited budget to investigate businesses, and the government’s subpoena power is so strong that, once inside, it is difficult to keep investigators out of your business. Violating regulations can result in civil penalties or loss of your business license. Some commercial laws and regulations can result in criminal penalties, including imprisonment.
Vendors / Suppliers
Strong business relationships with your key vendors is essential to the success of your business. When disputes arise, strong vendor contracts afford protections and minimize liability and business disruptions vendors may cause. Such protections should include robust dispute resolution clauses, vendor representations and warranties, and proper indemnification by vendors.