What to Do if Your Business is Sued (Part 1 of 2)

As a business owner, being served with legal papers is never a pleasant experience. But knowing how to react and what steps to take can help make the process more bearable and improve the outcome in favor of your business.

Let’s look at the first steps to be taken when your business is served with a lawsuit.

Don’t overlook legal documents.  The documents may not come via the delivery method you would expect. The documents may come via registered mail, a delivery service, or courier, or through a visit from the sheriff’s deputy or a U.S. Marshal.

Read documents thoroughly.  The documents can appear in a variety of formats. You may receive an informal-looking civil warrant instead of the typical summons and complaint. In Tennessee, not responding to the civil warrant could cost you up to $25,000 in general sessions court or an unlimited amount if in almost any other court. Remember that documents vary by court and by county.

Don’t panic.  They are just documents. Check for the response date. You may have anywhere from 10 days to 30 or even 60 days to respond.

Not taking action is not an option.  You’ll need to do two things immediately: 1) If it’s a claim that may involve your insurance, notify your insurer in writing. 2) Get the documents to your lawyer. Get help whatever you do. If you don’t take steps to deal with the suit, there’s a 99% chance it will be dealt with unfavorably in your absence.

Fight the urge to be your own investigator or lawyer. You may be tempted to talk to others to get to the bottom of the matter. Doing so may make your case weaker. Wait for instruction from your lawyer and/or insurer.

Preserve and organize relevant information.  Gather all documents that relate in any way to the matter. These may include contracts, bills, invoices, photographs, electronically-stored files, receipts or letters. Do not under any circumstance purge files or delete emails. No matter how harmful you think the files may be to your case, nothing will hinder your case more than missing pertinent files.

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