You’ve Been Served: A Four-step Plan to Handle a Business Lawsuit

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The day that your business gets sued will start like any other day. You wake up, head to work, and are open for business. Next, you’ll go over all your transactions, look through the inventory, and welcome the first few customers of the day. It would have been like any other day, except that you received a complaint from a customer asking you to pay for the damages they sustained because of your products.

In a situation like this, it can be difficult not to get overwhelmed by your heightened emotions. You might begin to spiral because you’re thinking about everything that could have gone wrong. Or you might rack your brain for information even though you’re clearly not in the right condition to remember them.

Once you receive a document from a process server, you shouldn’t lash out nor let your emotions get the best of you. Aside from the fact that you can’t achieve anything by being angry, you also won’t be able to get to the bottom of the incident. So, instead of spiraling, here’s a four-step plan that you can follow:

Step 1: Review the Complaint

When you have the complaint papers in your hands, the very first thing that you should do is discuss its contents with your lawyer. Double-check if it’s your information written on the papers because if not, you may be able to disregard the complaint. However, if it is truly yours, then you must proceed with the review.

What you should never do is directly communicate with the plaintiff or the complaining party, even if it’s only to clear up some issues about their complaint. This is because anything you say or do may be used against you in a court of law, so you must let your lawyer communicate and negotiate with the other party at all times.

Step 2: Gather All Documents

As with any legal situation, you’ll need to provide ample documentation and evidence to prove your innocence in the matter. This is why you must preserve all records that could be related to the case on hand, such as receipts, digital transactions, photos, videos, messages, or anything that can be used as evidence.

Don’t be tempted to destroy any incriminating evidence or fabricate new ones in the hopes of benefiting your business because, aside from this being illegal, it can also harm the future of your business in the long run. So, gather all your evidence and keep it in a safe place where it won’t be damaged.

settling a lawsuit

Step 3: Contact Your Insurance Provider

As a business entity, you’ll have insurance policies that may be able to help cover the expenses of claims and lawsuits. This can include general liability insurance, professional liability insurance, or employer’s liability insurance to cover the costs of your lawyer and court fees, or even settlement.

That’s why you should discuss with your lawyer whether you’ll need to contact your insurance provider from the get-go. But this will only be applicable if the lawsuit falls within the grounds of what your policies cover. That said, you can’t assume that your insurance provider will immediately cover the lawsuit with no questions asked.

Step 4: Plan Your Response

Most lawsuits or complaints come with a deadline for a response date, so make sure not to overlook that. This is because forgetting to file your response can automatically forfeit your right to defend yourself in the lawsuit, which means you won’t be able to share your side of the story, and the court can make any final judgment enforceable against you.

Your response could either be an admittance or a denial of the claims filed against you. This will also contain the details about whether you’ll want to settle out of court through alternative dispute resolutions or if you want to face a jury trial. But before you send in your reply, you’ll need to consider a few factors first.

For instance, would proceeding with the lawsuit be more beneficial to your business, or should you just settle with the plaintiff? You have to acknowledge that the costs of litigation can quickly snowball, given that you’ll have to go back and forth to court. Plus, you’ll have the attorney fees to consider too.

Understandably, there’s no one-size-fits-all solution when you’re dealing with a business lawsuit. However, you shouldn’t let your emotions govern your decisions, especially because it can cost you your business itself. So you must remember to put the best interests of your business at heart every time you make a decision that involves it because that’s the only way you can stay focused.

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