What to do if your Business is Being Sued by Another Business

Getting served with a lawsuit can be a complicated and distressing situation for any business owner. Managing a business lawsuit is a challenging undertaking which if not handled properly can cost your company heavily in legal fees. Business litigations can also continue for long periods taking valuable, productive hours from your operations and also tarnishing your company’s reputation.

Here the few steps that you need to take for managing a business lawsuit astutely:

Consult your Business Lawyer

Most organisations issue a demand letter to the businesses accused, before filing a lawsuit. You may also directly receive a formal complaint along with a summons, which includes the date, the time and the state of claims from the litigant.

As soon as you receive a demand or complaint letter, consult your company lawyer. It’s crucial to disclose the reasons for the litigation and discuss other important details of the case with your lawyer. An experienced corporate lawyer understands your business and helps you protect it from litigation.

If the complainant has initiated a demand letter, your business lawyer can help you settle or avoid the lawsuit altogether. In the case of a summons, it’s important to examine it carefully and look for any missing or incorrect entities. If there is one, your lawyer can help you dismiss the action entirely.

Halt Communication with the Plaintiff

Any further communication with the claimant after initiation of the lawsuit can and shall be used against you in the court of law. Therefore, immediately halt any ongoing operations or dealings with the businesses involved.

Select a Course of Action

Once you have examined the claims with your corporate counsel, it’s vital to select a course of action. Most business litigations arise due to miscommunication instead of actual misconduct. Alternate Dispute Resolution (ADR) is an effective way to settle business conflicts. ADR uses different resolution techniques such as Negotiation, Mediation and Arbitration to settle claims, avoiding unnecessary expenditure of time and money on the legal proceedings.

A practised ADR expert can help you negotiate a settlement or clarify any miscommunications with the plaintiff effectively, evading the redundant litigation.

Take Action

Whatever course of action you may decide with your business lawyer, it’s essential to implement it as soon as you can. Ignoring the lawsuit may give the plaintiff the right to file for a Default Judgement. A default judgement rules the lawsuit inevitably in the favour of the claimant if there is no legal action taken by the defendant within 30 days of receiving the complaint.

Continue your Operations

Business lawsuits can continue for a long time, it’s crucial that your business is not adversely affected by it. Carry on with your daily operations and try to avoid any unnecessary press. Objectively calculate the charges involved with the settlement and with winning the lawsuit with your attorney. Elect the course of action that benefits your business the most in the long term.