Business Litigation: What to Do When You’re Hit with a Lawsuit

Lawsuits can happen to the best of businesses, including yours. And when they do, the steps you take at the outset can mean the difference between a positive and a negative resolution.

For your reference, five considerations in the event your company is sued:

1. Loose lips could sink attorney-client privilege:

“Do not communicate about a lawsuit within your company unless a lawyer is present or copied on an email…”

[Link: 5 Things to Consider When You Are Served with a Lawsuit by Allen Matkins Leck Gamble Mallory & Natsis LLP]

2. Treat the lawsuit as a business decision:

“At a very early stage of the litigation, preferably right at the outset, the lawyers and the key executives need to sit down and decide what the business objective of the litigation is…”

[Link: Litigation for the Non-Litigious Company – Letting Litigation Drive the Business by Womble Carlyle Sandridge & Rice, PLLC]

3. Don’t wait to act:

“All court systems have deadlines within which an Answer, Counterclaim or other papers must be filed in response to a lawsuit. Normally, these deadlines are between 20 and 30 days after delivery of the papers, but they vary. Typically, the front page (the summons) will specify when the papers have to be filed. If your company does not file an Answer in time, the court may enter a default judgment against it, meaning that it loses without a trial. But you do not have 20 to 30 days to wait, you need to be proactive and react immediately.” (So Your Business Has Been Sued: Now What? by John Watkins)

4. Put the right team in place:

“This requires two things–experienced in-house trial lawyers and business experience. If the attorneys do not have business experience, that expertise can usually be found within the company. If in-house lawyers do not have litigation experience, it will need to be hired immediately. Important strategic decisions must be made at each phase of the case and, working together, each team member’s experience becomes invaluable.” (From Garbage Dump to Gold Mine: What Every Business Needs to Know About Litigation by Naves Law Office PC)

5. Tell your insurance company:

“One thing to keep in mind is tendering the lawsuit to the business’s insurance company. Insurance policies oftentimes cover a variety of risks that executives may not understand or may not recognize. Risk managers understand what is in an insurance policy and what is covered, but not all companies employ risk management professionals… It’s important to tender to every conceivable policy in order to potentially save hundreds of thousands of dollars in attorneys’ fees.” (Getting Sued by Ropers, Majeski, Kohn & Bentley)

Bonus: a successful defense starts well in advance of any litigation. Watch this video for tips on managing your electronic data before you are served with a lawsuit:

[Link: Manage Your Electronic Data Before Facing Litigation by Partridge Snow & Hahn LLP]

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