We know it can be overwhelming to receive notice of a lawsuit. Your business is your baby and the last thing you want to deal with is someone coming in and trying to take your hard-earned money. You may feel anxious, stressed, and unsure of how to proceed. However, it’s important to take immediate action to protect your business and minimize any potential damage.
Let’s discuss what you should do if your small business is facing a lawsuit.
- Take The Lawsuit Seriously
First and foremost, it’s crucial that you take the lawsuit seriously. Ignoring and hoping that it will just go away is the absolute worst thing you can do. Failing to respond will result in a default judgment against your business (and you if you don’t have a legal entity in place to protect you, you personally as well), which is cost-ly. Even if you believe the lawsuit is frivolous or without merit, it’s important to take appropriate steps to protect you.
- Contact an Attorney
Next, contact an experienced business attorney who can advise you on the best course of action. You really need an attorney to review the lawsuit paperwork (petition or complaint) and help you understand your legal rights and options. An attorney can also help you determine whether it’s in your best interest to settle the lawsuit or fight it in court – this can be difference from a 4-figure lawsuit to 6-figure lawsuit.
- Gather All Relevant Documents and Information
Your attorney is going to ask that you provide all relevant documents and information related to the lawsuit. This may include contracts, agreements, emails, invoices, letters, and any other records related to the issue at hand. It is important that you gather this information as soon as possible so your attorney can build a strong defense on your behalf. Have these ready to go when you first call the attorney you choose.
- Respond to the Lawsuit
Next, you must respond to the Petition or Complaint that was served on you if the lawsuit has not been dismissed prior to. Your attorney will help you draft a response, which must be filed within a certain timeframe. Failing to respond can result in a default judgment against your business. Your response will outline all your defenses and make any counterclaims you may have.
- Consider Settlement Options
In some cases, it may be in your best interest to settle the lawsuit outside of court. In fact, nearly 90% of all lawsuits settle before they ever get to trial. Settlement can help you avoid the expense and uncertainty of going to trial. Your attorney should negotiate with the other party (party suing you) to reach a fair settlement that protects your business.
- Prepare for Trial
If settlement negotiations fail, you will need to proceed through discovery (sharing evidence before going to court) and prepare for trial. Your attorney will help you build a strong defense, gather evidence, and prepare witnesses. It’s important to be honest and transparent with your attorney throughout this process so they can most effectively represent your business in court.
Facing a lawsuit is stressful, overwhelming, and an experience we know no small business owner wants to face. However, by taking immediate action and working with an experienced business attorney, you can protect your business, minimize the potential damage, and hopefully limit some of that stress and worry. If your small business is facing a lawsuit, feel free to contact Bounds Law today.
