What to Do When Your Company Gets Hit with a Business Lawsuit

Every year, 90% of the businesses in the US get into litigation.

With these odds, it’s only a matter of time before your business finds itself with a lawsuit on its hands.

If this will be your first time at the rodeo, a lawsuit can be quite unnerving. However, knowing what to do when faced with a business lawsuit can go a long way in getting you a favorable outcome.

Here is what to do.

1. Do Not Panic

Yes, lawsuits are unpleasant. However, panicking can cause you to act or say things that might injure your case. Keep in mind that you have several unexplored options.

When it comes to your attention that you are being sued, the best action is to do nothing until you are able to reach your lawyer.

2. Contact a Litigation Attorney

As much as possible, contact an attorney right away. If you are able to do this even before there is an official filing, the better.

Your lawyer can advise on the best actions to take to settle the matter or to ensure you have the best outcomes in court.

At times, they may restrict you from having any contact with the person suing you. If this is the case, strictly adhere to it.

Most complaints have a set period of time, usually, it’s 30 days. Contacting a lawyer immediately you are served gives them ample time to investigate and develop a winning strategy.

They are also experienced in the negotiation of settlements and can initiate these activities for you if this is the best course of action.

In some instances, a lawyer is the difference between landing in jail and walking free. Find out more here on circumstances under which an attorney is invaluable.

3. Your Assets: What Not to Do

If your lawsuit may cause you to lose your assets or money, do not go into transferring money and assets. This is indeed illegal in some states.

It’s allowed to spend assets on normal costs of living, but not in a deliberate attempt to hide them from creditors.

In this case, confer with a creditor or debtor lawyer to get clarity on what your options are and how you can safeguard your property.

4. Gather Information

Once you become aware of a pending lawsuit, start gathering all the information related to the case.

This information might come in handy during arbitration. 

5. Keep Information Regarding Your Business Lawsuit to Yourself

Discussions with your Priest, CPA, attorney, spouse, and psychotherapist fall under privileged communication. These means that these people cannot be made to reveal any information they have regarding your suit.

But that’s just it. Anyone else you discuss the case with might be called to testify.Such information does not apply to verbal exchanges only. Text messages, letters, and emails are also discoverable.

If you want to protect the people around you from being witnesses, refrain from sharing information that relates to your case with them.

6. Safeguard Evidence

No matter what the situation is, do not discard or destroy evidence. This is not only counter productive but also illegal.

Similarly, do not alter any records that pertain to your case. In addition to this, ensure to provide any documents that pertain to your case to your attorney.

To be on the safe side, give them everything that has anything to do with the case and let them decide what is useful and what is not.

They are also in a position to tell you what to forward to your insurer and to any other institutions if need be.

7. Have Your Own Records

Some lawsuits may last for years.

If this will be the case with yours, time may fade your memory on details pertaining to the case.

The best option is to write in a journal every little detail you can remember and keep this record. When your memory fails, you will have something to refer to.

You never know how long a lawsuit will take until its tail end. For this reason, get ahead of things by having your own records right from the beginning.

8. Estimate the Costs

It’s not uncommon for people to end up paying hundreds of thousands of dollars in legal fees trying to fight a case with lower financial implications.

If the value of the claim is higher than attorney’s fees, then its best to get an attorney on board.

However, if it’s lower, then you’re better off paying the claim and going about your business.

After the Lawsuit: Re-evaluation

While it’s virtually impossible to completely insulate your business from lawsuits, there are measures you can employ to protect yourself.

Incorporate Your Company

Incorporation protects your personal property. If you are sued and the applicant wins a case, your home, assets and bank accounts that are not linked to your business are safe.

The only assets that can be consolidated to settle a claim are those directly under your business.

Get insurance coverage

Talk to an insurance broker regarding the types of insurance covers that can benefit you. While these will not prevent you from being sued, your insurer can help cover your legal fees and costs.

Keep Proper Records

Draft legally binding documents when dealing with both internal and external clients. In the event that you are sued, these can be used to clearly explain your liability or lack thereof.

Implement safety procedures

Draft, implement and document company rules and procedures. A manual or employee handbook can prevent a lot of misunderstandings.

It is also important to provide excellent services and be responsive to customers.Many times, lawsuits come from customers who feel unheard.

If your business strives to provide stellar customer service and remain empathetic and accessible, you might be able to diffuse some lawsuits before they happen.

There You Have It

While living in a litigious society can seem threatening, a lawsuit does not mean you and your business are doomed.

In any case, most lawsuits are settled before the start or end of a trial.

Getting the most trusted lawyer in your locality will ensure that you have the right defense and the best odds of winning your case.

Check out our blog for six tips for finding the right lawyer in your area.