In today's Freedom Friday blog and email newsletter, I want to talk about a topic that some of my clients ask me about, and that's what your small business should do if it gets sued.  In Oklahoma, you only have 20 days to file a response to a lawsuit, and if you're an LLC or a corporation, you cannot represent your business in court, and you must hire an attorney.  In today's Freedom Friday blog and email newsletter, I'm answering the question, “How should my small business respond to a lawsuit?”

First of all, no one wants to get sued, especially if you're a small business owner.  Lawsuits can be expensive, and the good news is that some lawsuits can be taken care of by insurance, but any time your business gets sued, it can be an overwhelming experience, especially if it's the first time your business got sued.  The number one reason why your business needs a general liability insurance policy is that there may be coverage for the loss, and your insurance company may be able to provide you with a lawyer at a reduced cost or no cost to you (depending on the circumstances).  If you have liability insurance for your small business, and your business is sued, the very first thing you should do is contact your insurance company to see if they can help you.  But what else should you do?  Is there anything you should not do?  In today's Freedom Friday blog and email newsletter, I'm sharing five things you should do (or not do) if your small business has been served with a lawsuit:

1.  Don't Panic

One thing you should NOT do if your small business gets sued is to panic.  Many lawsuits are filed each year and just because you got sued doesn't mean you did anything wrong.  Many lawsuits are dismissed for a variety of reasons including suing past the statute of limitations, lack of jurisdiction, lack of standing, or even failure to state a claim for which relief can be granted, especially in the area of fraud.  Many defenses may be available to you, but you should consult with an attorney to see which of them, if any, would apply.

2.    Become Familiar with the Litigation Timeline

The second thing you should do if your small business gets sued is to become familiar with the litigation timeline.  In Oklahoma, you only have 20 days to hire an attorney, develop a defense strategy, and file a response to the lawsuit which is called an “Answer”.  All of this must be done in order to avoid a default judgment, which can have devastating consequences for your small business and sometimes for you personally if you were sued on a personal guaranty.

3.    Gather Documents

The third thing you should do if your small business gets sued is to gather documents.  If you have any relevant documents, photographs, or other evidence, which might be helpful in defending the lawsuit, now is the time to get that together in a file for your attorney.  This will save you a lot of time and money.

4.    Hire an Attorney

The fourth thing you should do if your small business gets sued is to hire an attorney.  If your business is an LLC or corporation, Oklahoma law does not allow you to represent your business in court, and if you try to do so, you can get a default judgment filed against you.  If you have insurance, and you were sued for a covered loss, your insurance company can step in and hire an attorney for you.  However, in some instances your insurance company won't be able to hire an attorney for you, or you may need to hire your own attorney.

5.    Develop a Defense Strategy

The fifth thing you should do if your small business gets sued is to develop a defense strategy.  Once you have an attorney you need to work with him or her to develop a defense strategy.  You may have grounds to file a counterclaim against the person or company that sued your business, or you may decide its best to settle the case to save the costs of defending the lawsuit.  Either way, you need to work with your attorney to identify your goals.  Also, if you decide to submit the case to trial, you will need to free your calendar for depositions, meetings with your attorney, and whatever hearings or trials you will need to attend.

Thinking about starting a small business?  Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth?  Please contact me at [email protected] to schedule a FREE strategy session.