In a comprehensive report, the Small Business Administration (SBA) notes that litigation risk is one of the biggest worries for the owners of small and mid-sized companies. This is an understandable concern: A business may face a lawsuit for a wide range of different reasons. Your firm could face legal action from an employee, customer, vendor, supplier, or competitor.
It is crucial that businesses know how to respond to the threat or filing of a lawsuit. Even a relatively modest mistake early on in the process could cause a company significant problems down the road. In this article, our Riverside business litigation lawyers highlight five steps to take if your company is facing a lawsuit in California.
- Stay Calm and Review the Complaint
If your business is being sued, it is easy to get overwhelmed or frustrated. As a starting point, it is important to stay calm and take a moment to review and understand the complaint. You need a clear-eyed view. A recommended first step is consulting with a California business litigation attorney. An attorney will be able to help you review the complaint, understand the basis (or lack thereof) for legal action, and explain your options for defending or resolving the case.
- Be Careful: Avoid Contacting the Counterparty Directly
When you learn about legal action against your business, you may want to call the plaintiff to discuss the matter. Be very careful when interacting with the party that has filed or is about to file a lawsuit against your company. As a general rule, it is best to deal with the counterparty through your attorney. What you say can be taken out of context and used against you. As an example, an attempt to be reasonable and resolve the matter could be twisted as an admission of guilt.
- Gather All Relevant Documents, Records, and Information
Careful, comprehensive organization is one of the keys to successfully defending a lawsuit. In reviewing the lawsuit, be sure to gather and preserve all relevant records and information that could help you raise an effective legal defense. You do not want important evidence to be misplaced or destroyed.
- Notify Your Insurance Company
Many businesses have insurance coverage that provides total or partial protection against lawsuits. Most commercial insurance policies have strict notification requirements. As a general matter, businesses have a responsibility to notify their insurance company as soon as practicable after being sued. Failure to comply with the terms of your insurance policy could be used as a justification by the insurer to deny coverage.
- Evaluate Your Options and Prepare a Response
Finally, businesses need to evaluate their options and formulate a response. As noted by the Judicial Branch of California, you generally have 30 days to formally respond to a lawsuit after a complaint has been filed. Of course, your company may have received a demand letter or a pre-suit notice letter, meaning the deadline does not always start running on the day you learn of possible legal action. How a business should respond depends on the specific facts of the case. A Riverside, CA lawyer can help you determine the best path forward.
Schedule a Confidential With a Business Litigation Attorney in California
At Wagner Zemming Christensen LLP, our California business lawyers represent clients with diligence, focus, and the highest level of professional skill. If your business is facing a lawsuit, we can help. Contact us today for a confidential, no commitment initial consultation. From our office location in Riverside, we serve companies all over the region, including in Pomona, Ontario, San Bernardino, Moreno Valley, and Rancho Cucamonga.