Is your business being sued? Here's what you can do

Sep 03, 2018

Any business is vulnerable to getting sued at any time – whether it is a small business, a startup, or a huge enterprise – which is why it is imperative that a business has sound legal defense. Litigation can cost a business money, time, and its good reputation.

In the event that your business goes through a legal battle, what are the key actions that you may want to take?

Let’s start with the demand letter. Before you get sued, you will most likely receive a demand letter from the one complaining about your business and demanding action from your end. Consult with your lawyer on how to respond to it, as sometimes, the way you respond to a demand letter can already keep you from getting sued altogether. In case the matter is not resolved through settlement, a formal complaint will be sent to you, accompanied by a summons. In the summons, you will see the details of the complaint, the deadlines, and the appropriate court for the case.

Peruse the papers right away. Time is of the essence at this point. A business lawyer is important as he or she will review all the details of the complaint and take note of all the deadlines. Missing deadlines can make you lose a winnable case.

Discuss your options. An experienced lawyer can assist you in figuring out available options for you. It is possible for a case to be dismissed or resolved even without taking it to court. These options can save your business significant amount of time and money.

Check your insurance coverage. A lawsuit entails court fees, legal fees, and costs for investigation; and this can be financially draining for a business. Your insurance company may pay or at least assist you in paying for your defense. Take due diligence in checking your old and new policies, and discuss the matter with your lawyer and insurance agent in order for them to help you find out whether your insurance policies can help you. Promptly notify your insurance company so that they can assist you better.

Do not communicate with the plaintiff. This is the job of your attorney now. Not only should you refrain from discussing your case with the plaintiff, you should not divulge any information about the lawsuit with anyone other than your lawyer, either. Any detail you reveal can potentially make its way to your opponent.

Keep records safe. Make sure that all relevant records and emails are kept in a safe place. After all, it is illegal to dispose records relevant to a case while the case is ongoing.

What can you do to protect your business from getting sued?

  • 1) Hire a good business lawyer. As a business owner, you must prioritize having a lawyer as a stand-by contact. You should do this as early as you start your business.
  • 2) Get insurance. A business must have liability insurance.
  • 3) Protect your personal assets. You can do this by having a trust own the business. A trust is a legal entity that can own a business, property, cash, and other assets. If a business is owned by a trust, only the assets of the trust can be impacted in case of a legal battle.
  • 4) Be more careful with what you say and do. You represent your business everywhere you go, so avoid making public announcements that are questionable, offensive, or politically incorrect; and statements that are libelous or slanderous.

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