What You Should Do When Your Company is the Subject of a Business Litigation Lawsuit
If your company receives notice that it has been named in a lawsuit, it can be an unnerving experience. Although never an ideal situation, defending a lawsuit is often an inevitable occurrence for most companies. The steps your company takes at the onset of litigation can greatly impact the success of the lawsuit and potentially mitigate future risk.
Companies can be sued based on all kinds of allegations—from discrimination to product liability claims. No matter what the allegations of the lawsuit are, your company needs to take the following steps when first presented with a lawsuit.
Step #1: Contact an Experienced Business Litigation Defense Attorney
Your company should never attempt to deal with a lawsuit on its own. The moment your company is served with a lawsuit, you need to contact an attorney who is experienced in defending the types of claims you have been sued for. Although you might be close friends with a divorce attorney, having a divorce attorney defend your company in a business dispute would be risky and counterintuitive. An attorney who is familiar with the types of claims you are facing will be better postured to develop an effective defense strategy as he or she will be knowledgeable about the intricacies of business or employment dispute litigation.
Do not wait to contact an attorney. Generally, your company will have 30 days to respond to the allegations laid out in the lawsuit. Be honest with your business litigation attorney. If you feel uncomfortable sharing certain facts with your attorney, choose another one you feel more at ease with. Your attorney can only defend your company with the information he or she has available. Even if the allegations contained in the lawsuit are correct or partially correct, share this information with your attorney.
Step #2: Keep All Documents
Even during times of non-litigation, companies generally have a requirement to preserve certain documents. If your company has been served with a lawsuit, it is imperative you do not destroy any documents that are associated with or could be associated with the allegations contained in the lawsuit. Your attorney will likely request copies of all relevant documents for review in order to better grasp the circumstances of the allegations and to develop possible defenses. If you destroy documents relative to the lawsuit, your company can face additional legal ramifications.
Step #3: Do Not Attempt to Contact the Opposing Party Directly
You may be tempted to contact the party who filed the lawsuit against your company in an attempt to resolve the allegations before the lawsuit proceeds. Do not do this. Once a lawsuit has been filed against your company, the time to resolve the allegations personally has passed. The individual or entity who filed the lawsuit is now represented by counsel. All communications to the opposing party must occur through their attorney.
You also enjoy the protection of being represented by counsel. The opposing party cannot contact you directly, only your attorney. Once a lawsuit has commenced, you also should not discuss the lawsuit with anyone except your attorney. Your communications with your attorney are privileged and confidential; however, communications you may have with other individuals are not privileged and may be subject to discovery in the lawsuit. Your attorney will be able to properly advise you on when and how you should speak about the allegations in the lawsuit.
Step #4: Contact your Insurance Agent
Check your insurance coverage policies to determine if you have coverage for the type of lawsuit your company is facing. If your company is covered, call your insurance agent. You may not want to involve your insurance company in fear of increased premiums, but litigation is expensive, and this is one of the reasons your company carries insurance in the first place. Your insurance can alleviate some of the financial burden that results from defending a lawsuit.
Step #5: Develop a Business Defense Strategy
Once you’ve found a business litigation lawyer, determined whether your insurance company will be involved, and taken all necessary document preservation steps, you can begin to work with your attorney to develop an effective strategy to defend your company. You and your defense attorney need to carefully dissect the allegations laid out in the lawsuit.
If the allegations have merit and can be proven, your attorney may advise you to undertake a settlement strategy that would limit the progression of the lawsuit, saving your company valuable financial resources. If the allegations do not have merit, you and your attorney need to start collecting evidence that can effectively disprove the opposing party’s contentions. If there are other parties that need to be brought into the lawsuit (i.e., other individuals or entities that contributed to the opposing party’s alleged damages), your attorney can present these other parties to be added to the lawsuit, which could limit your company’s ultimate liability.
It is important to note that every lawsuit is different, and no two litigation strategies are the same. Your company’s defense strategy can change and often does change as the lawsuit progresses and more evidence is presented by both sides. A good commercial litigation defense attorney will be able to change litigation dynamics and strategy as needed.