When you think your small business is about to be sued

When you think your small business is about to be sued

| Apr 20, 2020 | Business Law |

The prospect of your business’ first lawsuit can seem like a major life catastrophe. But many of the world’s most successful business people take a deep breath and refuse to let the legal distractions get in the way of their entrepreneurial spirit.

Paying attention to the early signs

Rarely, the first sign of a lawsuit is a notification that you have been served. More often, by then, someone has already forcefully told you why they are unhappy and they may have talked about a lawsuit.

At the first hint they may be considering legal action, it is probably time to stop talking with the complainer (properly called the plaintiff in a lawsuit) and start talking with an attorney. An attorney can help most effectively only if you tell them the complete story truthfully, and show them any letters, emails or other communications you have already exchanged with the plaintiff.

The earlier you tell your attorney about a conflict, the better the chance they can be helpful. They may be able to give you a realistic idea of how serious the issue could be and just might offer a cost-effective strategy to make it go away.

Also, your business insurance company should know as soon as possible. Any delay might void your coverage and, in any case, knowing your coverage situation might help you and your attorney make decisions.

Acting fast and staying calm when things get official

When the plaintiff does finally sue you, they file with the court, specifying who the suit is against and why. You then get a notification that you must respond by a fast-approaching deadline.

Of course, now an attorney is particularly crucial. To a qualified attorney, often the official complaint reveals a lot about what the plaintiff and their attorney understand, believe they can get, and much else. For example, they might have filed suit the wrong person entirely.

The legal issues involved in a lawsuit can be simple or complicated. They may seem likely to come out in your favor or perhaps not so much. But even when a business owner easily wins, a lawsuit can do a lot of damage if it succeeds in getting too deeply into the business owner’s head.

Keeping strong focus on the business’s balance sheet and the operations’ long-term interests can give a business its best chance of getting beyond the challenge.