How to Protect Your Business
While Being Sued
July 22, 2022
Building a successful company is a tough endeavor. You face many obstacles, including competition for customers, cash flow problems, supply chain issues, and employee recruitment and retention challenges, to name a few. Odds are, yours will be one of the 90% of businesses that face a lawsuit at some point (if you haven’t already become a part of that statistic).
What you do when your business is being sued may be critical to your company’s survival. A failure to respond in the right way and protect your business in the process may lead you to shutter your business and your entrepreneurial goals with it.
At Robinson Bradford LLP, we have been helping businesses protect themselves for decades in Stockton, Costa Mesa, and Temecula, California. As a small business, our firm is acutely aware of what’s at stake. As experienced business litigation attorneys, we are dedicated to helping our clients be successful when facing legal challenges.
What Business Lawsuits Are Common?
Coming in at 12 million annually, contract-related lawsuits are the most common type of business litigation. You may be sued by customers or clients, employees, vendors, landlords, or any party with whom you sign any type of contract or agreement.
Personal injury lawsuits are common. Slip-and-fall and other premises liability lawsuits are frequent among businesses with brick-and-mortar locations. Auto accidents involving you or your employees being accused of causing a crash while in the agency of your business occur often.
Moreover, as legal protections continue to increase, lawsuits related to discrimination are common, filed primarily by customers, clients, tenants, and employees. Employees may also file workers' compensation claims or lawsuits alleging workplace harassment.
In some types of businesses, violations of intellectual property laws are frequent grounds for lawsuits.
What Should I Do If My Business Is Sued?
There are certain precautions you should take when your business is being sued. These seven steps might protect your business from crumbling under the stress of litigation.
When you are served with notice of the filing of a lawsuit that lists you as a defendant, note all deadlines included therein. If there are no specific deadlines mentioned, that does not mean you can ignore it. In California, you generally have 30 days from the date of service to file a formal response with the court in which you are being sued. If you fail to respond in a timely manner, the plaintiff can obtain a default judgment against you.
When you are served, or in advance of being served if you know someone intends to sue you, immediately hire an experienced California business litigation attorney. Your attorney will ensure a timely and appropriate response to a lawsuit and will help you prepare a defense against it.
If you have insured your business against the type of lawsuit filed, notify your insurance company. For example, if it is a personal injury claim arising from a slip-and-fall, contact your premises liability insurer. If the lawsuit was filed by an employee injured at work, contact your workers’ compensation insurer.
Be careful with what you say or do outside the legal process. You need to avoid making the situation worse by committing slander or libel. Do not use social media or any type of communication to air your grievances with the plaintiff. All communication of any kind should be handled via your attorney. If not, you risk having your words and actions used as evidence against you in court.
Begin gathering records, correspondence, contracts, and other documents relevant to the allegations the plaintiff has made against you. Your attorney will need these to develop a defense.
Conduct your own internal investigation of the allegations and use your attorney’s expertise to help. Remember that your employees and those acting in the agency of your business are your business. As such, you are responsible for their actions. It is important that you rely on guidance from your attorney to make sure you do not make the situation worse. This is especially true if the plaintiff is a current or former employee.
Be completely honest and forthcoming with your attorney. Remember that attorney-client privilege applies to your communication with your lawyer, and your legal counsel cannot adequately defend you if you fail to provide any and all information relevant to the lawsuit allegations. Your attorney has only your best interests at heart and will guide and counsel you with those in mind.
What Should I Not Do
When My Business Is Sued?
If your business is sued, do not ignore the lawsuit and do not take steps to attempt to conceal evidence or proof of the plaintiff’s allegations.
If you do find clear evidence that could support the allegations, do not just continue business as usual. Talk to your attorney about taking steps to rectify the situation immediately. It could curtail the subject lawsuit, but it might certainly keep someone else from filing a similar one in the future. For example, if a new employee policy will keep an event from recurring, implement it right away. Finally, do not draw attention to the lawsuit, especially by lashing out at the plaintiff.
Don’t Risk Your Business. Call Now.
The odds of having your business sued are great, but the odds of losing your business because of it don’t have to be. The best way to reduce the risks of negative impacts on your business is to hire an experienced and tenacious business litigation attorney right away.
If your business is being sued or may be sued in Temecula, Stockton, or Costa Mesa, California, call Robinson Bradford LLP now. We can help.