What to Do If Your Business Gets Sued

By Boyd Jenkins posted 11-01-2020 08:00 PM

What to Do If Your Business Gets Sued
Your business has been served with paperwork. Someone is bringing a lawsuit against you. It might be another business, a customer, or even a former partner. Regardless of the cause, you're about to enter an unfamiliar arena. While you may be quite astute when it comes to how your business runs, it's unlikely that you have much experience with being sued. While this is undoubtedly stressful, being sued is not uncommon. Before you respond, you must formulate a plan. The best moves you can make are those outlined below.

Don't Panic

Many of the major mistakes made by business owners after being sued happen during the initial moments of panic. "Staying calm is one of the most important things you can do. It's the only way you'll make it through a lawsuit." says lawyer James Sharpley. While it's impossible to be completely dispassionate, you must try to keep your feelings in check. Follow the advice below and make sure to stay quiet about what's going on. The last thing you want to do is to put your business in jeopardy because you said the wrong thing to the wrong person. Panic is one of your biggest enemies, so don't give into it.

Call Your Lawyer

Your first phone call after receiving paperwork should always be to your attorney. While others will have a great deal of advice for you, only your attorney can tell you what to do next. Depending on your situation, you may be dealing with a number of time-sensitive actions that must be performed. Only your lawyer can let you know precisely what to do, so don't delay. This is one phone call that simply cannot be put off.

Talk to Your Insurance

Your business should have some form of insurance to handle this kind of situation. Call your insurance company and let them know that you're being hailed into court and find out if you have coverage over this kind of incident. While you can't necessarily expect your insurance company to be perfectly helpful, they will be able to tell you what you can do to make a claim on your policy. In some situations, the insurance company will actually get involved in the legal process, so it's better to talk to the company sooner rather than later.


If possible, keep things out of court as long as possible. While you might be hauled into court at some point, it may be a possible to negotiate with the other party before the court date. Not only do courts tend to look favorably upon those who manage to settle their problems on their own, doing so can also help you solve your legal issues without the same sort of financial sting. While not always a possibility, working directly with the other party is often the best way to avoid the lawsuit and keep your business' finances intact.

Make Sure Everything is Documented

If you're being sued, the other side will want access to your documents. Make sure that you get all the documentation you have related to the case and store it somewhere safe. While the documentation might not be needed in court, it's better to have it than not. It's also important that you don't destroy any paperwork at all during the trial - even if that's a normal part of your business. Keep every document you have, as any move to destroy paperwork could be seen by the court as your attempt to destroy evidence. In this case, it's better to be too cautious than not cautious enough.

It's important that you follow all the advice above if your business is sued. While the process can seem incredibly stressful at the time, it's important to remember that this too will pass. If you do everything right and you're willing to work with the system, you should be able to move forward and put the suit behind you. Remember, most of what you will be doing as the party being sued is responding on time and making sure your bases are covered - you have little control beyond that, so make sure to do things right and try to move on as best as possible.