A Rancher’s Guide to Risk Management: Legal Risk–Part II

When it comes to handling your ranch operation’s legal risks, the old adage “an ounce of prevention is a pound of cure” applies well in the sense of protecting against liabilities stemming from property, goods and services, laws, and regulations. That said, keeping accurate and detailed business records and consulting with a knowledgeable attorney are paramount to your overall risk management strategy.

This guide, assembled by Redd Summit Advisors, is the second in a five-part series aimed at helping you identify risks and formulate strategies to operate a successful livestock operation. Read on for more details and bookmark our blog to stay informed.

Evaluating Your Livestock Operation’s Legal Risk in Risk Management

Legal risk encompasses three core areas: liability, laws and regulations, and contractual obligations. An overview of your ranch as it applies to these elements can help you establish a baseline to aid in circumventing your risks.


Liability is your level of responsibility for anyone on your property or near your livestock and equipment. This includes employees, visitors, contractors, and to some extent—trespassers.

Laws and Regulations

Brand inspections, registration laws, health documentation laws for livestock, and insurance laws for people and equipment are examples of things that make up this area of legal risk. Additional aspects include regulations such as those governing the use of public lands for grazing and those associated with hazardous waste. Poor legal forethought or poor protection related to any of these areas can directly influence your financial risk via fines and lawsuits.

Contractual Obligations

These include things like delivery of goods and services, payments, and crop or lease agreements. Some examples are: forward contracting of livestock or feedstuffs with expectations of delivery, pasture rent, and herd health services.

How to Manage Your Livestock Operation’s Legal Risks

Black and white photo of a cow with ear tags.

Access to a good lawyer, specifically one who understands agricultural laws and liabilities, can help you navigate all aspects of legal risks that may affect your business. To locate an attorney, try contacting a local livestock organization or your state’s bar association for resources. You can also find suggestions on the Center for Agriculture & Food Systems website here.

Whatever you make legal agreements on, including things like leases and crop share agreements, remember to first get it all in writing. Why? Because it’s much easier to develop a quality agreement up front than it is to later sort out legal problems stemming from vague, verbal contracts. Make it a practice to always read through your contracts and agreements—and if you have questions—consult an attorney. In summary, don’t sign anything until you're certain of your obligations and duties.

Insurance is another critical tool to help manage legal risk, and a strong policy that protects your physical liability in relation to property and people should be in effect at all times. Plan to review your policy at least once annually, should changes in your operation occur or your premiums rise significantly. Also seek out competitive quotes as needed so you know you’re getting the best value for your money.

Last but not least, take a look at your corporate structure. Are you a sole proprietor or are you incorporated? The entity type you choose for your business can play a big role in protecting your personal assets if there are any legal concerns arising from your business activities. 


Part II of this risk management guide helps you identify what legal risks you may have with your livestock operation and how to manage them effectively. Watch our blog for more posts about risk management and contact us at 1-800-825-2355 to learn more about our Pasture, Rangeland, and Forage (PRF) insurance and Livestock Risk Protection (LRP) insurance.

Macy Holmgren

Macy Holmgren is a Digital Marketing Intern at Redd Summit Advisors.

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