In today’s litigious business environment, facing a lawsuit can be a challenging and costly ordeal for any business. Statistics from the Small Business Administration reveal that up to 53% of small businesses in the U.S. find themselves sued each year. The prospect of expensive attorney fees, court costs, and potential damage to your brand’s reputation, whether justified or not, underscores the importance of proactive planning to stay out of court and conflicts.
However, despite meticulous preparation, businesses may still encounter lawsuits or threats of legal action. In such situations, it’s crucial to be well-prepared and take strategic steps to navigate the challenges that lie ahead.
01 – Grasp the Legal Process
Understanding the basics of the legal process is vital when dealing with a lawsuit. In a civil lawsuit, the party bringing the legal action is the plaintiff, while the party being sued is the defendant. Typically initiated with a summons and complaint, the summons serves as notice, accompanied by a complaint that outlines the reasons for the lawsuit and the relief sought. The complaint details allegations against your company, providing the legal foundation for the lawsuit.
Whether received through a summons or an attorney’s letter, comprehending the legal documents and the process involved is essential.
02 – Act Promptly; Don’t Ignore It
Ignoring a lawsuit or the threat of one is a grave mistake, even if it seems baseless. Failure to respond can result in a default judgment against your business, requiring payment regardless of innocence. It’s imperative to acknowledge the lawsuit, respond within the specified time frame, and never communicate directly with the party suing you.
Preserving relevant evidence and suspending document shredding policies are critical steps to take immediately. Avoid discussing the case directly with the other party or their attorney without your legal representation.
03 – Consult Your Insurance Provider
Having appropriate business insurance is a crucial asset in times of legal challenges. A reliable insurance provider can offer legal representation and cover legal fees, court costs, and potential damages. Different types of insurance, such as employment practices insurance, general liability insurance, and cyber insurance, provide protection against various lawsuits.
Ensuring your business has the right insurance coverage is paramount. Contact your Personal Family Lawyer® with business planning expertise for an insurance audit and guidance on obtaining the necessary coverage.
04 – Engage an Experienced Business Lawyer
Unless the case is suitable for small claims court, hiring an experienced business lawyer is essential. A knowledgeable lawyer can either facilitate a settlement outside of court or litigate on your behalf, significantly influencing the case’s outcome and minimizing stress and costs. Legal representation can turn a lawsuit into an opportunity for improving your business systems and fostering growth.
When confronted with a legal threat or lawsuit, reaching out to your reliable legal advisor becomes essential for assistance. Nonetheless, it is highly advisable to cultivate a proactive connection with your Family Wealth and Estate Attorney® for strategic advisory services before potential legal challenges emerge.
The potential consequences of a legal dispute on small businesses can be substantial, underscoring the importance of proactive legal assistance. Your Family Wealth and Estate Attorney with business planning expertise offer continuous guidance, covering aspects such as insurance coverage, reviews of legal agreements, and navigating the complexities of employment law. Connect with us today for comprehensive support and proactive planning to steer your business clear of court proceedings and conflicts.
This article is presented by Michelle Bell, an expert in estate planning and business succession services. Our office provides comprehensive legal support for businesses, assisting you in making informed decisions throughout your entrepreneurial journey and in planning for future contingencies. We also offer a specialized session where we review your business’s legal structures. To arrange this consultation, please click the following link: https://calendly.com/mcblawpllc/30min.
The information in this article is intended purely for educational and informational use and should not be considered as advice on ERISA, tax, legal, or investment matters. For advice specifically tailored to your unique situation, such advice should be sought independently from this educational content.