Being served with a lawsuit is no fun. For many, it’s scary and confusing. A lawsuit (aka: Petition/Complaint/Claim for Relief/etc.) is a legal document that outlines someone else’s complaints against you. It’s a one sided story that may not have any basis in reality. Take a deep breath. Don’t panic. Here’s a plan.
First, realize that you only have a certain amount of time, often 20 days, to respond with a written Answer to the Court from the time you are served with the lawsuit. If you don’t respond on time, a judgment based solely on the Plaintiff’s alleged facts can be entered against you, no matter how inaccurate, unfair or slanderous their allegations are. Once the Judgment is entered, it is expensive, difficult, and time consuming to challenge.
Second, even though the allegations may be personal and completely false, resist the temptation to call the plaintiff or his lawyer directly and argue about it. Everything you say to them can be used against you later. Instead, contact them via counsel hired by you or your insurance company. Furthermore, don’t talk to anyone about your lawsuit except for your defense team. Your employees should be strictly instructed to do the same. If someone calls wanting to talk about the lawsuit, politely tell them that they must refer all inquiries directly to your counsel. What your representatives say can’t be used against you.
Third, notify your insurance agent. You may have insurance coverage that would not only pay the claim if you lose, but also pay the entire legal defense bill. The cost to defend a claim can exceed the cost of the actual damages alleged. If there is no insurance coverage, then hire legal counsel yourself. Experienced lawyers who specialize in your business or this type of lawsuit should be your first choice. If your insurance coverage is something less than complete, ask your insurance agent if you should hire counsel directly in addition to the insurance company’s supplied counsel.
Fourth, don’t take the lawsuit personally. Turn it over to your defense team and let the pros handle it. Thousands of lawsuits are filed every day. We only hear about a small percentage of them. Many are completely baseless. Operating a business in the U.S. today means you’ll likely be sued by someone some day for something. Once your counsel files your Answer in court, the real business of litigation starts. Only about 3% of lawsuits make it to trial. The other 97% are handled by Summary Judgment, mediation, arbitration, and/or settled prior to trial. Trading information with the other side, the Discovery Process, is often the most time consuming and complicated part of the whole lawsuit. Good record keeping pays big dividends during Discovery.
So, if you are served with a lawsuit, relax, take a deep breath, have a glass of wine, then pull out this article and follow the steps until your representatives take over. You’re now a member of a large and non-exclusive group of lawsuit Defendants. Welcome to the club.