It was the jolt that you as a small business owner would never forget. Another party has decided to sue your company. An assortment of feelings surfaces from shock and frustration to anger and bewilderment. This was an unexpected development that you and your colleagues must confront.
It also is the time for cool heads to persevere. You do not want to do anything rash and, instead, must give this situation some careful thought. You and your company must take some crucial initial steps in dealing with this matter. You want to make the right moves about what you should do when someone or another company sues you.
Discuss with others, gather evidence
From the get-go, you understand that a lawsuit can be costly not only financially, but reputationally as well. Can you afford to spend thousands of dollars? You may have to as all signs point to a potential settlement. The vast majority – 95% — of all lawsuits do not go to trial, rather they end in a settlement.
But before anything gets to that point, you must take some crucial steps if your company has been sued:
- Discuss the matter with others: This group may be partners and colleagues within your company as well as trusted friends. You need to make careful consideration of this matter. Some of your colleagues may be aware of certain details of the lawsuit that you may not. Also, make sure these conversations are strictly confidential.
- Contact an attorney: A legal ally will examine your case and explain the strategic options available. An attorney also can determine whether the lawsuit is legitimate or merely a scare tactic by the other party.
- Assemble essential records: When dealing with a lawsuit, you need to respond with supporting evidence. Gather as many records as possible. This would include correspondences, invoices, contracts, letters, emails and electronic documents. Also, create a timeline of events and dates that help solidify your memory. And do not destroy anything.
According to the Small Business Administration (SBA), 36 to 53% of small businesses face lawsuits each year. Your company has joined this list. Make sure to take the critical initial steps to help you prepare for this situation.