• February 2020
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File a Lawsuit: How to Respond to One

lawtrades file a lawsuit scales of justice

Most entrepreneurs hope to never have to face someone threatening to file a lawsuit against their business. It can be an intimidating and taxing process to deal with legal threats. However, it need not be, and the threat of a lawsuit does not have to end with you actually getting sued. Even if it does, there are simple steps you can take to ensure the process is manageable and resolved in a timely manner.

First, avoid litigation

The best outcome for your business will almost always be to avoid getting sued. Avoiding litigation saves on costs and time. And, perhaps even more importantly, buyers and investors hate legal messes. It clouds your business plan and projected growth in uncertainty, which is never good for company valuations. There are several steps you can take to try and avoid a legal threat culminating in a lawsuit:

Talk it through

Often, the treat of a lawsuit is really only intended to intimidate. Avoid frivolous lawsuits and unnecessary legal costs by always inviting the person threatening you to the table for open, constructive conversation. Try to find out what their key complaint is. Focus on listening, and on making sure they understand that you are really listening to them. Don’t assume that you understand their concerns from written emails or angry letters. Try, earnestly, to offer a solution to their problem.

Record everything

Getting the the other party into open conversation shows a solution-oriented approach from your side, which benefits you in the negotiations. However, you do not want to put yourself in a vulnerable position because of it. Be sure to reduce any understandings reached during verbal discussions to writing. Similarly, do not throw away anything related to the potential lawsuit. Gather and protect all relevant information and documents.

Be careful about what you say

Whilst being open to conversation and negotiation, be sure never to admit fault, or to offer money as a settlement. That is not a solution, and can be construed as an admission of guilt.

If litigation is unavoidable, manage it pre-emptively

If offering solutions did not help, you should get ready to resolve the lawsuit in your favor as soon as possible.

Manage the lawsuit internally

There are a few steps that you should take to ensure that the lawsuit causes minimal disruption for business as usual.
Be very transparent about the potential litigation. Don’t keep your employees in the dark. Depending on your business, you might also want to expand that transparency to your clients.
Assign one person in your company to deal with the lawsuit. Having multiple people responsible for your legal response can lead to contradictory, or simply counter-productive, efforts from multiple people.

Contact your insurance

If you are insured against the type of lawsuit in question, be sure to contact your insurance as soon as possible. You will have to ensure that you follow the process prescribed by the insurance, and having access to their advice as soon as possible will help with that.

Review your contracts

If there is a legitimate ground for a lawsuit against your business, the flaw will most likely arise out of an avoidable oversight in your contracts. Be sure to finecomb your contracts for other potential legal issues. LawTrades offers easy and affordable access to our business contract lawyers for this purpose.

Lawyer up

There are several reasons why getting an attorney on board as soon as you are faced with a legitimate threat of a lawsuit. Most importantly, an attorney will be able to tell you how serious the threat is. Often, people can be overly litigious merely as an intimidation technique. At the same time, you do not want to dismiss a lawsuit that might be a serious threat to your business. The quickest, easiest way to distinguish between these two cases is to get experienced legal advice.

A second reason is that a swift, and legally correct, response to a threat of a lawsuit is often an important strategic move. It sends a strong message. Finally, as time passes, you might have fewer options available to you. Getting a clear idea of your options and your best plan of action is always a good idea–this tends to resolve issues in a timely manner so that you can go back to growing and perfecting your business! LawTrades offers affordable, accessible, and convenient legal advice from experienced attorneys. Get in touch today!