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

The type of business you own will usually dictate the most common types of lawsuits your business will face. In general, business owners face three major categories of litigation:

  • Third-party claims.  These include personal injury claims and often an insurer.
  • Contract claims.  These include disputes with customers and vendors.
  • Employee claims.  These may include non-competition/non-solicitation agreement enforcement disputes, worker’s compensation claims, civil rights claims, discrimination claims, and other employee issues.

Your business may also face regulatory, licensure, or anti-trust issues, depending on the business you own.

How the Claim Gets Resolved
Every case can take a different course and pace depending on the nature of the claim, the court, and the case strategy. Below is a generalized description of how a lawsuit may proceed:

  • Response.  In all courts except general sessions there will be a written defense on your behalf. Your lawyer will work with you to prepare a written defense. The time you have to respond varies depending on the jurisdiction. This written response sometimes includes a motion to dismiss the case.
  • Discovery.  If the case is not dismissed, both sides enter the discovery phase. The goal of discovery is to obtain information held by the other party that is relevant to the lawsuit. Methods used in discovery include:
    • Depositions.  Statements made under oath in response to oral examination or written questions and that is recorded by a court reporter.
    • Interrogatories.  Written questions that must be answered by the opposing party.
    • Requests for Production.  The other party is asked to produce specified documents or tangible things or provide permission to inspect land or property belonging to the other party.
  • Summary Judgment.  Either party can make a motion for summary judgment at various stages of the litigation process. A summary judgment means the judge looks at the facts, applies the law, and makes a ruling. The judge may determine that there is no need for a formal trial.
  • Trial.  There are two types of trials: a bench trial, which is heard by a judge, and a jury trial, which is heard by a jury. At the trial, the case is either dismissed or a judgment is rendered. The good news is that only a small percentage of cases make it to trial. Settlement discussions occur along the way, and most cases are resolved by motion or settlement before they make it to a courtroom.

Rob Hazard is an attorney and CPA with GSRM. For decades, business owners and entrepreneurs have turned to GSRM for courtroom results and innovative strategies that advance business interests, protect client holdings and block potential loss. If you are seeking legal or other professional advice, we encourage you to reach out directly to us – after you have fully read and understand our disclaimer.  

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