Disclaimer: All the information that you’re about to read below is only meant to serve as a primer on the legal options that are afforded to you if your business has been sued, and shouldn’t be mistaken as a replacement for professional legal advice. Trying to get out of a lawsuit filed against your business on your own isn’t the time to DIY your way into something that can run your business into the ground. What you should do instead after reading this is to call a licensed attorney as soon as you can and ask them what you can do to counteract the lawsuit filed against your business.

Running your own business isn’t complete without its fair share of risks. After all, it’s what makes having a business challenging yet exciting at the same time. What’s not exciting though is when someone files a lawsuit against your business, as getting out of it can cost you a massive amount of time, money and resources. However, instead of panicking your way into court as you try to defend your business from the accusations hurled against it, you should keep your cool and start taking note of these things that you could do if your business is facing a lawsuit.

Receiving a Demand Letter in the Mail Isn’t the Same as Being Sued

If it’s any consolation to you, anyone who wants to file a lawsuit against your business normally doesn’t do so right away. If someone is claiming to have suffered a slip and fall accident in your establishment, or an employee has sustained an injury on the job, you may not know about it right away.

  • More often than not, someone who wants to file a complaint against your business writes a demand letter addressed to you and sent via registered mail.
  • You would want to get ahold of a lawyer the very minute you receive a demand letter in your mail so that they can help you decide on how you’re supposed to respond to it.
  • If you believe you did nothing wrong to merit having a demand letter addressed to you, you can reply back to it by explaining why your business shouldn’t get sued.
  • On the other hand, if you know that you did something to aggrieve the person who sent a demand letter asking you to pay for damages that your business had caused them, you would have to pay the amount being asked of you.

Bad News: Hiding from a Lawsuit Is Pointless!

On the other hand, if you’re too cocky to respond back to the demand letter sent to you, you’d have to steel yourself as you receive a formal complaint against your business.

  • A formal complaint mailed either to you or someone that you designated to receive all legal correspondence on your behalf by a process server comes with a summons telling you that a lawsuit has been filed against your business and you have to appear in court.
  • As a lawsuit filed against your business typically doesn’t proceed until you’ve acknowledged receipt of the formal complaint, you might have thought of just moving your business someplace else where the process server won’t be able to hunt you down.
  • However, even if the process server has failed to find you despite using whatever tracking technology is available at their disposal, the complainant can publish their formal complaint in a newspaper.
  • You would want to face the lawsuit filed against your business instead of hiding from it and hoping that it would just go away.

You’re Now Ready to Face the Lawsuit Filed against Your Business, Then What?

No one in their right mind would willfully want to deal with a lawsuit, especially not someone like you who has a lot on your plate. But instead of hiding like a rat, here are some things that you could do when you have to face a lawsuit against your business.

  1. Review the lawsuit papers carefully with a licensed lawyer.

If your business doesn’t have its own lawyer, you would want to hire one so that they can help you go over the details of the lawsuit filed against you.

  • You and the attorney you’ll hire should check if the persons and entities that were mentioned in the lawsuit are correct, and if they are, you should have a litigation hold implemented as soon as possible.
  • Transparency and honesty are of utmost importance here, so you should tell your lawyer everything that has to do with the lawsuit filed against you, confidential information included.

  1. Check if your current insurance policies can cover the lawsuit.

As defending the lawsuit filed against your business can burn a deep hole in your pocket, you should get in touch with your insurance provider to find out if your current insurance policies can shoulder the costs associated with the lawsuit itself.

  • Different insurance policies cover businesses if ever they find themselves having to face a potential lawsuit, but you shouldn’t assume that a general liability policy alone can shoulder the costs associated with every lawsuit filed against a business.
  • Your lawyer and insurance agent should help you identify what kind of insurance you have for your business so that your insurance provider can be informed promptly.

  1. Submit a written response to the lawsuit within the specified time frame.

Just as you have deadlines to meet while running your business, your written response to the lawsuit filed against you should be submitted preferably before the deadline mentioned.

  • The typical time frame for you to submit a written response to the lawsuit filed against you is between 20 and 30 days which is more than enough time for you to go over it and draft a reply against the allegations thrown at your business.
  • You shouldn’t ignore the lawsuit filed against you, no matter how ludicrous the claims presented there might sound to you as failure to respond to it allows the court to take the complainant’s side instead of yours.

  1. Consider settling out of court instead.

If going to court just to try and win a lawsuit filed against your business feels like too much a waste of time for you, the less desirable yet more convenient option of settling it with the complainant out of court is always open for you.

  • Out of court settlement is undoubtedly a lot more affordable compared to taking things to court.
  • There are three ways that you can resolve your dispute with the complainant via out of court settlement, namely face-to-face negotiation, mediation, and arbitration.
  • Face-to-face negotiation lets you and the complainant talk about the lawsuit in person, while mediation and arbitration require the presence of an impartial third party who would try to work things out between both of you.
  • The difference between mediation and arbitration though is that in the former, the third party isn’t allowed to decide on a resolution to the lawsuit itself while in the latter, the arbiter has to make a legally binding decision on your case.

Owning and running a business has its own share of risks, most of them which you take hoping that you’d be rewarded in the end for doing so. One major risk that can put everything that you’ve worked so hard for in jeopardy if you don’t deal with it is when someone sues your business. Instead of not taking it seriously or just flat out ignoring it, the things listed above should be able to tell you what you could do if you have a lawsuit filed against your business. You should remember though to not let a lawsuit get too much in the way of running your business, especially if you have a strong chance of winning a fair and just trial in court.

About the Author: 

Don is a law enthusiast who’s had over 25 years of experience in his field. He currently writes for Abels & Annes, P.C. – Chicago and enjoys sharing his experiences with those who want to learn more about the legal world. In his spare time, he spends quality time with his family and friends.