Important Steps to Take When Your Business is Being Sued
July 15, 2022
If you own or operate a business, disputes, and disagreements pretty much come with the territory. They can arise from a number of sources, including vendors, customers, employees, or even partners or co-owners. While most disputes are resolved interpersonally and amicably, you never know when someone might decide that a lawsuit is the only way to resolve the situation.
When served with a lawsuit, most people running a business find themselves venturing into new territory, and they might react in ways that actually jeopardize their chance of resolving the issue at hand.
If you and your business are facing a lawsuit in San Jose, California, contact the civil litigation attorneys at Leet Law. We’ve helped everyone from sole proprietors to corporations in fending off lawsuits and protecting their rights and interests. Leet Law also proudly serves clients in San Francisco, Oakland, Palo Alto, and the rest of the Bay Area.
Common Sources of Business Lawsuits
Every business relies on contractual arrangements with other individuals and entities to help them carry out its operations smoothly and efficiently. You may have contracts with vendors to supply parts or products you need, service contracts with accounting, or even cleaning firms. If you fail to live up to your side of the contract, the other party can sue you for breach of contract. In fact, breach of contract is one of the primary reasons behind business lawsuits.
Employees also have rights when it comes to many workplace issues. They may sue you if they feel shortchanged – you didn’t pay overtime, for instance – or they may have issues with workplace discrimination or harassment. Even partners can sue. If a partner doesn’t agree with the direction of the company or feels you aren’t managing the finances correctly, that person might sue for breach of fiduciary duty.
Other common causes of business lawsuits include: tortious interference, real estate, and commercial lease disputes, trade secret violations and patent infringement, product defects, breach of warranty, insurance disputes, equipment lease disputes, construction disputes, loan disputes, and lender liability claims.
Beware the Lawsuit Timeline
If you are being sued, you should be aware of how the litigation process works. Once you’re served with the lawsuit, you have 30 days to respond – basically, to refute or deny the allegation and/or the details in it. If you don’t respond in 30 days, which includes weekends and holidays, the plaintiff suing you can file a “Request for Default,” and the court can order you – without even being present – to pay the compensation claimed in the initial filing.
If you file a response, a date for an initial hearing will be set and can buy you more time to come up with a defense or reach a settlement with the plaintiff. The bottom line is that once you are served with a lawsuit, you need to contact an attorney experienced in business and civil litigation to map out a strategy for you.
Important Steps to Take
Your initial reaction, when served with papers, might be to have a cup of coffee or something stronger with the plaintiff to work things out. While this may be possible, it’s just as possible that you may say or do something that the plaintiff can use against you if matters go to trial. Here, the Miranda Rights warning that “anything you say can and will be used against you” equally applies. So, instead of rushing off to use your personal persuasive powers to resolve everything, contact an attorney, and let the attorney do the negotiating.
In short, the first and most vital step to take in defending your business is to seek out and work with a knowledgeable attorney and follow that person’s guidance and advice.
On the practical front, you will want to gather and preserve all documents relating to the issue at hand. This includes not only paper records, but also electronic evidence, including emails, text messages, videos, photos, and social media posts.
If there are witnesses within your organization, or employees who were involved in the substance of the lawsuit, talk to them with your attorney and get their statements. This can help you get a clearer picture of everything involved and help you develop a defense strategy or negotiation strategy with your attorney.
What Actions to Avoid
Emotion may overwhelm you when you first are served with the lawsuit but don’t act rashly. In anger and frustration, some owners/operators might make rash or pejorative comments, either in public or on social media. Again, remember that everything you say can and will be used against you, whether in court or in settlement talks.
The same goes for written and electronic communications. As part of pretrial proceedings, the plaintiff and their attorney will send you a request for all pertinent documents. If a stream of emails between you and your business partner contains derogatory comments – or worse, comments that may show you are at fault for what you’re being sued for – those can be used against you in court and could factor into any settlement negotiations.
Turn to Knowledgeable Legal Counsel
The bottom line is, when facing a lawsuit, to take a deep breath and contact a knowledgeable attorney immediately. If you try to take matters into your own hands, your actions can easily backfire. Plus, you must keep in mind the 30-day window you have to respond to the lawsuit. If you miss the deadline while you’re trying to cut a deal with the plaintiff, the court might render a default judgment. Time is of the utmost essence. If your business is facing a lawsuit in San Jose, San Francisco, Palo Alto, Oakland, or anywhere in the Greater Bay Area, California, contact us at Leet Law today.