You own a small business and you work hard to do things right. You carefully screen new employees and you provide adequate instructions for them to conduct business in an ethical, fair, and professional manner. Nevertheless, you or your company has been threatened with a lawsuit or you have become a defendant in a lawsuit. A competitor, a former employee, current employee, or a client has threatened to sue you or has actually sued you. What is a small business supposed to do if it finds itself in this situation?
First, Don’t Panic – Hire a Lawyer
Whether it is your first time being sued or whether you have been sued before, it is important not to panic. Know that when you are served with a lawsuit that you will have a certain number of days to respond to the lawsuit. It is probably not a good idea to try to handle the lawsuit by yourself. You need to hire a competent attorney or law firm to help you protect your investment. Just as you are an expert in what you do, attorneys are experts at what they do. They are familiar with the litigation systems in both state court, federal court, and even small claims court. Just as a person without knowledge of the construction industry should not attempt to build their own house, a business owner who is not familiar with the legal process should not try to defend themselves in court. Remain an expert at what you do
and allow an experienced lawyer to handle the defense of your litigation matter. The attorney will guide you through the nuances of the litigation process.
Meeting with the Lawyer
Most attorneys handling business matters will have the client sign a retainer agreement and pay an initial retainer amount to pay for the lawyer’s time and to cover the initial fees and costs that the attorney will incur. The lawyer will usually bill against the retainer amount on an hourly basis. In other words, lawyers are initially paid for their services by the hour. Thereafter, expect the lawyer to invoice the client monthly and to request that the retainer be replenished.
Consider Having an Attorney or Law Firm on Retainer
If you do not already have a lawyer to represent you and your small business, consider having a lawyer on retainer. A retainer fee is a sum of money that is paid beforehand for services that will be rendered by the attorney. The retainer amount is paid monthly and is based on an estimate of the amount of work to be done by the attorney that month for the client. Having an attorney on retainer before you need him will give you the proper amount of time to screen the lawyer and to ensure that if you are sued that you will have the right lawyer for your needs. This will also give you the “peace of mind” in knowing that if you are ever sued, you will not have to spend precious time searching for the “best lawyer” to handle your claim. You can leave the lawsuit to your lawyer and you will be able to continue your small business. Again, be an expert at what you do.
A lawyer who works on retainer is a person who is said to be “on-call” for the small business so that he can respond to whatever legal needs arise. The lawyer on retainer will know your business and will be ready to act or react on a moment’s notice. This will enhance your chances of properly responding to the lawsuit that has been filed against you and/or your small business.
If you anticipate that you will have a lot of legal questions for an attorney, the monthly retainer can also be used to get those questions answered in a timely fashion. The attorney will bill you for the time spent in consulting with the client and performing the necessary legal research to properly respond to those inquiries.
Online Legal Services and Apps
Despite the promise of online legal services or apps that can assist the small business, these services do not effectively replace the business attorney. Small businesses need lawyers who understand them and the nature of their businesses. They also need lawyers who can give them the personal attention that they need. These things are impossible with an app or an online corporation that provides business or legal services.
If the threat of a lawsuit is upon you, it is important to have accurate records so that you can be defended properly. Keep detailed records of occurrences and things that have happened. This will help you tremendously if you end up in a negotiation, mediation, arbitration, or in court. While testimony of witnesses with knowledge is important, courts, jurors, and arbitrators pay particular attention to evidence that come from documents, letters, emails, text messages, and memoranda. Gather as much information as possible and have this information ready when you meet with your new lawyer or your lawyer on retainer.
Call Your Insurance Company
If you have insurance to cover the claim or possible claim, you might need to put your insurance company on notice of the claim. Once you contact the insurance company, a representative will provide you with the necessary information to file a claim. If you do not have general liability insurance, it may be a good idea to obtain insurance to cover your business in the event of a lawsuit. Again, you will sleep better knowing that there is insurance that can cover the business in the event of a judgment against the business.
Be Careful About Talking to the Lawyer or Representative from the Other Side or to Clients
You may have heard the phrase, “what you say can and will be used against you in a court of law.” This is particularly true when a lawsuit has been filed. After you have been sued, you might think that it is a good idea to share this information with others. However, you do not want to say anything to others that can be used against you in an arbitration or in court. When a party to a lawsuit makes any statement that is relevant to the issues in a claim, those statements can be used against that party without any restraints such as hearsay or character evidence.
It might also be a good idea to have strict rules that employees must follow regarding talking to others about your business. This is because statements of employees can often be used against the employer in a court of law or in arbitration.
This information has been provided for informational purposes only and is not intended and
should not be construed to constitute legal advice. Please consult your attorney in connection with any specific situation under federal and/or Louisiana law and the applicable state or local laws that may impose additional obligations on you and/or your family member.
Conflict Free Resolutions is based in the New Orleans area and our commercial litigation attorneys litigate in both federal and state courts. Because litigation can also occur in other venues outside of court, our experience assisting clients in administrative hearings and ADR proceedings has proven to be a great benefit to our clients.
Contact us today at 504-302-2462. © 2020 Conflict Free Resolutions.