Representatives for Goldman Sachs, a major banking corporation, recently reported that litigation costs have significantly cut into its earnings this year. The company has faced severe scrutiny over mortgage-related legal matters. Despite setting so much aside to handle the business litigation, it is not uncommon for such issues to sting, even a little bit. While Goldman Sachs is known on a global front, there are lessons that can help business owners in Michigan protect their companies if faced with legal complaints.
Goldman Sachs is not the first banking company ordered to make amends to borrowers who were hurt due to poor lending practices. The company even put aside nearly $1.5 billion to cover litigation. While the company has still fared fairly well in the last year, profits are down by about $1 billion. This still, however, supposedly placed the company in a better position than was anticipated.
For a company like Goldman Sachs, these numbers certainly hurt, but these are losses that will likely not take too long to recover. However, for other business owners, these numbers are staggering, and even a small portion of what was lost by Sachs could mean the ends of their companies. So what can be learned? Securing appropriate legal protections from the very beginning is a must for smaller business owners and making necessary adjustments throughout the life of the company would also be wise. Furthermore, having good representation and funds appropriated for such matters can help if legal complaints are filed.
Taking action long before it is actually needed can help take the sting out of business litigation. Even though some losses may be expected, earning potential may not be hurt beyond repair. Michigan business owners can seek legal guidance to ensure their companies are financially protected if, for whatever reason, legal claims are brought forward.
Source: The New York Times, “Litigation Costs Drag Down Goldman Sachs’s Earnings“, Nathaniel Popper, July 16, 2015