Your Business Was Just Sued. Now What? 10 Tips
If your business has never been sued, your first thought may be – this is B.S.! Then you may start asking questions: How can we be sued in a time like this? Should we call the other side to see if we can resolve this? Should we counter-sue? How do we find a lawyer? How will this affect the company’s future?
Getting served with a lawsuit can be frustrating and confusing. But there are things you can do that will help your company prepare for litigation.
1. Don’t talk to non-attorneys about the lawsuit. You may want to talk, email, or text co-workers, outside parties, or possibly the party suing you about the lawsuit. Refrain from doing so. Many are familiar with the Miranda warning given by police to criminal suspects – anything you say can and will be used against you in a court of law. But the same is somewhat true for civil cases. Your words can be used as evidence. Don’t help your opponent build its case. Only talk to lawyers about the lawsuit.
2. Find an attorney ASAP. Individuals can represent themselves, but corporations cannot (at least in Michigan). Many find referrals by asking a trusted colleague, friend, or family member. Others turn to websites such as avvo.com where attorneys are rated by peers and prior clients. In any case, do your homework. Try to find an attorney who is familiar with the subject matter and, preferably, the court. Court customs and procedures can vary by location. Be sure to ask any potential attorney questions such as: Have you handled a case like this? Have you been in front of this judge? Did you get a good result? How long did the case last?
3. Ask for a budget. Lawsuits can be expensive. Ask your attorney to prepare an estimate of the potential costs and fees (usually called a litigation budget) before work begins. Knowing how much the case may cost, while considering the amount in controversy, will help you and your attorney develop the best game plan.
4. Ask about options. There are a number of things you can do with your first response to the complaint, such as filing a motion to dismiss it (not always available); exploring out-of-court resolutions (possibly through mediation); counter-suing; or preparing discovery. There’s no one-size-fits-all strategy for every case. But be sure to discuss your options before choosing a strategy.
5. Gather and preserve records. If you have relevant documents, contracts, emails, or letters, gather them for the first meeting with your lawyer. Ask if you should prepare a chronology of events. Documents help provide a complete picture. Failing to provide all relevant documents at the beginning of the case can damage your position later in the case. Also, make sure you preserve, and don’t destroy, relevant evidence. Your attorney can also help you issue a litigation hold, which is a memorandum sent to employees instructing them not to delete electronically stored information (ESI) or destroy documents that may be relevant to the lawsuit.
6. Check if you have insurance coverage. Depending on the type of lawsuit, your company may have insurance to cover the cost of defending the lawsuit. If you do, notify your carrier about the lawsuit as soon as possible.
7. Discuss your expectations. In your first meeting, talk about expectations (e.g., fees, possible results, how long the case might last), so you can discuss whether your expectations are realistic.
8. Think objectively. You may be emotional (understandably), so it may be difficult to make objective, reasonable decisions. Wait before making important decisions. Your attorney should also help you look at your options objectively to find the best business solution.
9. Look for the lessons. Find out what caused the lawsuit to be filed and see if there are things you can do to avoid similar lawsuits in the future. For example, ask your lawyer if a lawsuit could have been avoided if you had a different contract or company policy.
10. Understand this too shall pass. I’ve been involved in numerous complex disputes over the last 16 years and, so far, no case has lasted forever. The vast majority of business cases end before trial, usually because the case is resolved with a motion or because the parties settle. For example, in 2018, Michigan’s Oakland County Circuit Court handled 17,439 civil cases, and only 162 ended after a trial. That’s less than 1%. Sure, some lawsuits are longer than others, and there is always a possibility of an appeal. But there are things you can do to arrive at a resolution sooner rather than later.
The above list is for informational purposes only and not intended to be a complete or exhaustive summary of what to do after your company is served with a lawsuit. The appropriate or best strategy will depend on the facts of your case. Every case is different. Thus, readers should not act upon this information without first seeking the advice of a lawyer.
Joseph A. Doerr, owner / litigator / mediator at Doerr Law Firm
838 W. Long Lake Rd, Suite 100, Bloomfield Hills, MI 48302
firstname.lastname@example.org; (248) 212-0167; www.doerrfirm.com