Don’t Let a Lawsuit Derail Your Whole Operation
Just yesterday, a friend called me up to discuss a lawsuit he was involved in. He is the manager of a retail store and apparently both he and the store are being sued for allegedly wrongfully terminating a former employee. As a result, my pal has spent the past year in depositions, responding to discovery requests, meeting with his attorney, worrying, and worrying some more.
The worst part? “We did nothing wrong,” he says.
That business lawsuits are a time-consuming nuisance at best, and a financial nightmare at worst, is a given. The fact is, litigation is a pretty poor way to resolve disputes, business and otherwise. They are expensive, cumbersome, frustrating, time-consuming, and scary. As I used to tell my clients back when I practiced law: “You never know what a judge or jury will do. You could win, you could lose, you could get a judgment from a million dollars, or you could go bankrupt.”
So what do you do once you have been served with papers?
The first thing to do is to carefully read the complaint. When someone sues your business, their lawyer drafts a document outlining the allegations against you. This is called the complaint. While your lawyer will of course carefully go over the complaint, you need to first.
• What does the plaintiff say you did wrong?
• What facts do they have to back up their allegations?
• What do you know to be the truth?
Too many people rely on their lawyer to tell them what the complaint says. Yes, there will be some legal mumbo-jumbo in there, but most of it will be in plain English. Knowing what the plaintiff alleges you did wrong is vital.
Next step: Call your insurance agent. Depending on the facts, you may be insured against not only the potential loss, but the legal defense as well. A Comprehensive General Liability policy (CGL, or liability insurance) often covers the cost of hiring counsel. In fact, if you are covered, the insurance company will hire and pay for the lawyer. So see if you are covered.
If not (and even if you are in fact covered), the next step is to call your own attorney. Either you will need to hire him or her to defend you, or you will need their opinion as to what you should do, the merits of the claim, how to proceed, and so forth.
Next, you need to gather some facts and make a clear assessment for yourself regarding what course of action you want to take. Lawsuits, as indicated, are a drain in many ways. If you did something wrong, owning up to it to yourself and your attorney can save you a lot of time, since settlement will likely be your best solution. And if you did nothing wrong, then that too will help you navigate the choppy litigation waters to come.
Finally: Good luck.