What to do if Your Business is Sued

Posted on April 26th, 2017
Legal Services

There are always risks associated with owning and running a business. One of them is the possibility that you might at some point be sued.

It could be by a disgruntled employee, an injured customer, or another business just to name a few possibilities. Some of the reasons could be valid and other might be frivolous and without merit. But no matter who is suing you or what the reason is, you may wonder what to do if your business is sued.

1. Remain Calm

Don’t immediately panic. Take a deep breath because the world will continue to spin and revolve around the sun. Depending on the situation, you may even come out relatively unscathed. Of course, on the other hand, it could also turn into a long drawn out battle. But either way, you will get through it.

2. Contact a Lawyer

In truth, if you have a business of your own you should already have a lawyer. If you don’t, you need to hire one immediately. Choose someone you trust and have a good relationship with.

According to Business News Daily your choice of attorney should also include someone who will explain things on your level and not dodge your questions. As far as cost, any lawyer worth their salt is going to be expensive, but it’s better to pay more for a good attorney than less for a mediocre or bad one. Hiring a cheaper lawyer could cost you more in the long run if the ruling in your case doesn’t go your way due to your lawyer’s lack of experience or knowledge.

3. Always Take it Seriously

Even if you know you are innocent, the judge and lawyer for the plaintiff don’t necessary know that. Don’t put off responding or ignore the lawsuit because you think it is wrong or ridiculous. Doing so may cause the court to automatically rule in the plaintiff’s favor by default. It could cost you thousands or even your entire business.

4. Be Honest With Your Attorney

Show all documents to your lawyer and tell him or her everything. Whatever you have to say to them must remain confidential so there is no reason not to be forthcoming.

For example, if a customer slipped on ice in front of your store because you failed to clean the sidewalk when it snowed, tell your attorney those facts about the incident.

In order to have the best outcome in the case your lawyer needs all of the information you can give. The same holds true if you are being wrongly accused of something. No matter which is the case for you, your lawyer needs to know right away of any and all legal documents you receive, including being served. This enables them to have time to prepare, interview those involved, and develop a plan for your defense.

5. Keep All Documentation

If you have paperwork, recordings, photos, or any other documentation pertaining to the incident in question, keep all of it. Don’t empty the trash bin on your phone, computer, or any other electronic device without scouring it first for supporting documentation.

In addition, be careful not to unwittingly dispose of written documentation that could support your innocence. Also, ask your lawyer if it is possible to file a litigation hold or preservation order against the other party. This requires them to retain any records that relate to the case. Whenever you have documentation that proves or supports your side of the argument, you have a better chance of winning your case.

6. Zip Your Lips

Understandably, you may be upset by the lawsuit being brought against you and your business. Sometimes this leads to the need to blow off steam and vent to someone else about it. However, no matter the circumstances or guilt, do not discuss it with anyone other than your lawyer. This includes the person suing you as well as other business associates and friends. Any information discussed could be used against you even if it was said innocently or taken out of context. All communication should go through your lawyer.

There are a few exceptions to this rule. The law states you may talk to your doctor, priest, or spouse about the case that has been brought against you. Doing so may help you release a little of the tension the situation can cause without having negative consequences to your lawsuit.

7. Keep Your Emotions in Check

Some people are naturally more emotional than others. Try to keep your emotions in check, especially if you wind up in court. Judges don’t like to listen to emotional people. If you can keep yourself under control when you talk to the judge or on the witness stand it is to your advantage. When you end up in court you need every advantage you can get so remaining calm is important. Practicing calming techniques ahead of time may help.

8. Call Your Insurance Company

Legal battles are expensive. If you wind up in court, it could even be financially devastating to you and your business. As a result, many businesses carry several different insurance policies that cover all types of legal situations including court costs and other legal fees. If the situation deals with an employee, for example, pull out your workman’s compensation insurance policy and read through it carefully with your attorney. Or, if you are dealing with a liability situation, review your liability policy.

Once you have pulled out and gone over the appropriate policy with your lawyer you should know what your level of coverage is. Now you are ready to contact your insurance carrier. Make sure you do it timely because some policies won’t cover you if you do not report the pending lawsuit within a certain period of time.

9. Settle if Possible

No matter who is at fault or what the circumstances are, it is always cheaper and more desirable to settle out of court whenever possible. It sounds great to stand your ground and hold on to your principals. But at what cost are you willing to do that? Trying to win the case may cost you far more than a settlement would. From a financial perspective it may not be worth the court battle to prove you are in the right. Talk to your attorney about the best strategy for your unique situation and case.

10. File a Countersuit

Filing a countersuit against the plaintiff isn’t always an option. But, depending on the situation, sometimes it is warranted. Talk to your lawyer to determine if you could have reason to take such an action.

11. Get the Case Dismissed

Occasionally it may be appropriate for your attorney to file a motion for dismissal of the case. One example is if the information in the lawsuit is incorrect in any way. If that happens you may not have to go through the hassle and expense of a long drawn out legal battle.

Running a business is risky but knowing what to do if your business is sued can help you get through a legal battle if one should arise.

Kayla Sloan

Kayla Sloan

Kayla is passionate about helping people get their finances in order so they can pursue a life of freedom. She quit her job to work for herself with over $148,000 of debt and swears it was the best decision she's ever made!

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