According to the Government of Canada, there were about 1.23 million employer businesses in the country as of December 2019. Many of these businesses operate daily without thinking about the threat of a lawsuit. However, your company is always one step away from lawsuits that can be filed by clients, vendors, employees, and even other businesses for various reasons. Lawsuits can be pretty expensive, but you can limit the damage done if you know what to do when they occur. Below are some tips worth remembering to help your company navigate getting sued.
1. Contact a lawyer
Hiring top-notch legal counsel is one of the most vital things to do when battling the legal system. It is estimated that there are 130,000 lawyers in Canada. Most of these lawyers specialize in particular areas like family law, intellectual property law, criminallaw, and business law. It is essential to have a knowledgeable attorney in your corner to give your business a fighting chance against the lawsuit. If your company faces white collar crime charges, a good criminal defence attorney can devise a solid and effective counterargument to attain the best possible outcome.
2. Do not ignore the complaint
Many legal experts agree that the worst way to handle a lawsuit is ignoring it altogether. It is essential to note that any complaint you receive is on file in the court system. The prosecuting attorney will surely not forget the case, so neither should you. Therefore, ignoring the lawsuit and hoping it blows over is never a viable option. In most cases, not responding to a complaint and summons within a given period can lead to a default judgment against your business. This judgment is completely enforceable even if rooted in facts that you think are wrong or deficient. Consequently, the plaintiff can foreclose on real estate owned by your business, freeze your company's bank accounts, or take any other action the court deems appropriate. As such, never ignore any complaints you receive to avoid falling victim to default judgments.
3. Let your insurance provider know about the lawsuit
Various business insurance policies exist to protect companies if they get sued. For example, general liability insurance typically covers accusations of defamatory remarks about a rival company and third-party injury claims. Similarly, a professional liability policy covers client accusations that your business caused them a financial loss. Therefore, if your policy covers the lawsuit, you will receive assistance from your insurance provider to pay for court costs, attorneys' fees, and any settlement you are found liable for. Therefore, reach out to your insurance provider after getting sued for protection.
4. Do not reach out to the plaintiff
It might be tempting to call the plaintiff to talk things through with an eye toward an amicable settlement, especially if it is a past customer or employee. However, communicating with the plaintiff can do more harm than good since anything you say can be used against you in court. As such, it is prudent to speak directly to your lawyer concerning the lawsuit and let them contact the plaintiff's attorney. Also, focus on what you can control after the lawsuit instead of what is out of your hands. Therefore, continue striving for business excellence and outstanding customer service in your operations instead of focusing on the plaintiff's case against you.
Matt Hoffer is a crypto enthusiast and gamer. When he's not de-constructing the blockchain, you can find him chilling with some lemonade in the shade or playing a round of golf.