Facing an Actual or Potential Lawsuit? Quick Tips for Business Owners

When businesses come to Goosmann Law for legal advice related to an actual or potential lawsuit, they frequently fall into one of two buckets. One bucket includes businesses that are well-versed in the handling of disputes. These businesses, whether big or small, are typically more prepared at the onset. They show up with key documents in hand, have already taken efforts to preserve their evidence (including emails), and have already notified their insurers of a potential dispute. 

The second bucket of businesses, on the other hand, are those with much less, if any, experience with formal disputes. These businesses, regardless of size, are much less familiar with the lawsuit process and have less knowledge regarding both the anticipated costs of a lawsuit as well as the time which the business owners, officers and/or employees will need to devote to the dispute.   

Fortunately, whether a business is big or small, and whether well-versed or unfamiliar with the world of litigation, there are simple steps that can be taken to ensure an actual or potential lawsuit is handled efficiently and competently to protect your business. 

Top 3 Things to do if Your Business gets Sued

For businesses fortunate enough to have never been sued, there is good news - there are only 3 things you need to do right away if your business is served with lawsuit papers. 

1. Consult an attorney. A defendant typically has 20-30 days to file a response to a lawsuit after they are served with lawsuit papers (typically called a Summons and Complaint). Failure to file a timely response to the lawsuit can lead to a default judgment being entered against your business. Good news – once you get the attorney hired, it is their job to walk you through the process and handle the dispute so you can focus on running your business as much as possible.
   
2. Notify your insurers. Unless you are confident your business does not have any insurance policies which could apply to the lawsuit, you should notify your insurers of the lawsuit as soon as possible. Your insurers might have a duty to hire a lawyer to defend your business, and they also might have a duty to pay any judgment.
   
   
3. Preserve your evidence. Once your business has been sued, it is imperative that you preserve all documents, including emails and text messages, related to the dispute. If there are other officers or employees who possess relevant documents related to the dispute, instruct them to avoid destroying/deleting them. In particular, it is critical to preserve emails, text messages, and other electronic forms of communication.           

While following these 3 steps will not guarantee victory by any means, it's certainly a step in the right direction.

Thinking of Filing a Business Lawsuit?  Here are 3 Helpful Tips

If your business is thinking about filing a lawsuit, to collect a debt or enforce a contract, for example, there are 3 basic concepts that should drive your thought process at the onset. At Goosmann Law, we address these concepts proactively with our clients:

1. Many disputes can be resolved without going to court. There are certainly disputes which require a show of force and/or need to be taken to court for various reasons. Goosmann Law files state and federal court lawsuits seemingly every day, and many lawsuits cannot be avoided. However, some disputes are resolved through mediation or some other form of alternate dispute resolution. In addition, some disputes can be resolved through a simple demand letter and negotiations with the opposing party before a lawsuit is even filed. While Goosmann Law has a team of lawyers ready and willing to go to court, that is not always the best or only option. Don’t assume you will have to file a lawsuit to resolve your dispute. Evaluate your options with a lawyer.  

2. Keep your emotions in check. There are many things to consider when trying to determine whether to file a lawsuit, such as the probability of success, the anticipated costs, and the likelihood your business will be able to collect a judgment rendered against the other business. While some cases are properly pursued “as a matter of principle” or “to prove a point” or “send a message,” it is generally important to not let your emotions drive your decisions, assuming you are running a for-profit business. Your lawyer should help guide your decision-making process.

3. Make sure you understand the economics of the dispute. A lawyer should ensure a business understands the costs associated with a potential lawsuit, as well as the amount of time that the lawsuit will require of the business and its various officers and/or employees. In addition, other side effects of a potential dispute should be considered. For example, is your business willing to initiate a formal dispute, knowing it will probably cause irreparable harm to the business relationship with the defendant? Overall, do the pros outweigh the cons? Is the dispute “worth it?” Does your business have the time and resources to devote to a lawsuit? There are many issues to consider when weighing your options.

Every dispute comes with its own set of unique facts, and those facts can certainly impact how a business proceeds with a dispute. Following these 3 tips will enable the business and its legal team to properly evaluate the options and formulate a strategy for resolving the dispute. For questions, call our Sioux Falls, Sioux City, or Omaha office today.