You’re Named in a Lawsuit — Now What?
“You’ve been served” is a scary phrase — don’t let it freak you out
We live in extraordinarily litigious times. Individuals are almost as likely to be sued these days as companies.
The threat of being sued can be intimidating. The moment the legal papers are placed in your hand can be terrifying.
Stop! Don’t panic!
Don’t be intimidated by a threat and don’t be frightened by a lawsuit.
Disclaimer: I’m not a lawyer and this isn’t legal advice. But I used to write a column for a law magazine, I’ve had lawyers for clients, I’ve had clients who were routinely involved in litigation, and I’ve been sued (the case was dropped because I had truth and the First Amendment on my side), so I know what I’m talking about.
With that said, what do you do after you’ve been served with a lawsuit?
First, take a deep breath. Whatever is going to happen as a result of the lawsuit isn’t going to happen in the next few minutes or even few days. You have time to figure out what’s happening and plan a response. What’s next?
Carefully read the document.
Be sure you’re actually being sued.
If the goal of the plaintiff (the person filing the lawsuit) is to get the defendant (you, in our hypothetical discussion) to stop doing something, the process will likely begin with a cease and desist letter.
That letter can be written by the plaintiff or an attorney. It will describe your illegal or objectionable conduct, tell you to stop it (cease) and to not restart it (desist).
A cease and desist letter is not a lawsuit. You are under no legal obligation to respond to it. If you don’t respond, it’s likely that you’ll get more letters that will become increasingly aggressive and could eventually lead to a lawsuit, so if you can resolve the conflict through negotiation at the letter level, it’s better for everyone. But you don’t have to.
If it is, indeed, a lawsuit …
If you’re being sued, read the lawsuit carefully. It will tell you who is suing you, what they claim you have done or didn’t do, what remedies they are seeking, and when you have to respond.
Make a note of that deadline — it’s critical. That tells you how much time you have to react and come up with a preliminary plan. If you fail to respond to the lawsuit by the deadline, it could result in a default judgment against you.
Once you have read the lawsuit, take a few more deep breaths.
Then do two things as soon as possible:
1. Call your attorney.
2. Call your insurance agent/broker, who will tell you how to notify your insurance carrier.
Do not respond directly to the plaintiff or the plaintiff’s attorney. Good attorneys are skilled at manipulating people; don’t give them a chance to trick you into saying something you’ll later regret.
In most cases, if you have insurance, your insurance company will handle your defense and pay any damages up to the limits of your policy coverage. This applies not only to business litigation but often to personal situations, such as if someone is injured on your property or if you’re involved in a car crash.
It’s a good idea to have your own attorney involved, even if you’re covered by insurance, so that you have your own trusted legal advisor to consult as the case progresses. Yes, it will cost you money and yes, it’s worth it.
Never assume that your insurance doesn’t cover whatever you’re being sued for. Even if you think it’s an uninsured risk, notify your carrier — you could be wrong.
Other important steps
Take immediate measures to preserve all evidence related to the lawsuit. Your attorney can give you guidance on what to do based on your specific situation.
In a business, designate a single individual in the company to be the primary point of contact for everything related to the lawsuit. This reduces the risk that something important will get overlooked or that efforts will be duplicated.
The point of contact needs to be someone who has the time, ability, and authority to deal with the lawsuit. It should not be the CEO or the owner. That person needs to focus on running the company.
Finally, be patient. While the lawsuit may have a short period for your initial response, litigation often takes months or even years to resolve.
In the meantime, you have a life to live.
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