Lawyer and client reviewing paperwork during legal consultation

Important Steps to Take When Your Business Is Being Sued

Chris Sanders Law PLLC March 28, 2023

Operating a business exposes the owner or operator to various legal actions. If your business is open to the public, a customer or client may suffer an injury by slipping and falling on a wet surface or loose carpet. This type of injury falls under the umbrella of premises liability, and a commercial liability policy should help cover legal expenses and any compensation to the victim.  

However, even your own employees can get a litigious urge. They may feel discriminated against or that you’ve retaliated against them for reporting a safety violation and bringing in state or federal investigators. Those vendors and others with whom you have business agreements may also bring a breach of contract lawsuit against you if they feel you’ve not lived up to your part of the bargain.  

In other words, you may be happy at work running your business one fine morning, and someone shows up to serve notice of a lawsuit against you. What do you do then?   

Just the act of being served can be disturbing enough, and if you’ve never been through the experience before, you may react in the wrong way and make matters worse for you and your business entity. You need to consult immediately with a reliable attorney.  

If you’re in or around Louisville, Kentucky, you may have heard of me because I’m involved in a lot of community movements and union issues. At Chris Sanders Law PLLC, I have the experience, knowledge, and resources to help your business get on the correct path when facing a lawsuit. 

Common Business Lawsuits 

I’ve already mentioned three areas of concern that can lead to a business being sued. One is premises liability, in which someone besides an employee is injured on your property because of your negligence. (Employees are covered by workers’ compensation.) Another area is employment law. Your employees are covered by various federal and state statutes regarding discrimination, harassment, and retaliation.   

The final of the three mentioned areas involves any contractual agreements you’ve entered into. The point to note here is that a contract doesn’t have to be written to be considered binding. Your oral agreement or handshake with a supplier or accountant can also be considered a binding contract, even though oral contracts may be harder to prove in court since both sides can claim different interpretations. Anyway, a breach of contract can result in matters going to court.  

Another area is that of competitors. Competitors may accuse you of stealing their trade secrets or using false or misleading advertising to cause them reputational damage. These actions can fall under what is called tortious interference or even libel or slander. On the flip side, you may also find it necessary to bring action against one of your competitors for the same reasons. 

Important Steps to Take When Being Sued 

The first step is to consult with an attorney experienced in business law or in the area of law, such as employment law or nonprofit organizations, that is at the heart of the lawsuit you face.  

You are also going to need to act quickly. Once you are served papers for the impending legal action, you have 20 days to officially respond. If you do not respond or miss the deadline, the person or entity suing you can move for a default judgment. The facts may be on your side, but if you miss the deadline, it might not matter.  

Also, try not to manage things on your own by contacting the person or entity suing you. You may end up saying or doing something that they can use as further evidence in their favor. Despite the urge, don’t talk about the case with anyone who is not closely involved with you on your side of the issue. Let your attorney handle any negotiations or make any statements for you.   

And don’t go on social media to chat about the lawsuit or paint the plaintiff in a bad light. This can only backfire.  

Working with your attorney, assemble all pertinent documents, data, or other forms of evidence that relate to the pending legal action. This can include emails, text messages, social media posts, written agreements such as contracts, phone records – anything that bears on the case.  

You also need to be open and honest with your lawyer. Any communications you make or information you share is protected by attorney-client confidentiality. Your lawyer will need to know all the facts to decide the best steps to take. Most lawsuits are settled outside of the courtroom through negotiations or perhaps mediation or arbitration, but your attorney will decide on which course of action.  

If you have insurance that covers the lawsuit, you’ll want to involve the insurance company in the process. The insurer may cover a large part of the attorney’s fees and even the settlement you are ordered to pay out or agree to. Your attorney can help you with any interactions with the insurance company. 

Protect Everything You’ve Worked For 

Once you’re sued it’s too late to take out an insurance policy. Depending on the nature of your business, there are different types of policies. In addition to commercial general liability policies, there are also plans for professional errors and omissions, workers’ compensation, product liability, and even cyber liability. Be sure you’re fully covered before opening your doors for business.  

In Louisville and elsewhere in Kentucky, my firm, Chris Sanders Law PLLC, works with nonprofits, labor unions, and other community organizations to strive for a better living and working environment for all. Contact me if you are looking to organize for a worthwhile cause or join one already functioning.