In today's Freedom Friday blog and email newsletter, I want to talk about a topic that many of my clients ask me about, some more than others, and that's what should your small business 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 yourself in Court, and you must hire an attorney. In today's Freedom Friday blog and email newsletter, I'm answering the question, “What should I do if my small business gets sued?”
First of all, no one wants to be sued, especially if you're a small business owner. Lawsuits can be expensive. Some lawsuits can be taken care of by insurance, but any time your business is sued, it can be an overwhelming experience, especially if it's the first time your small business is sued. The number one reason why your small business needs a general liability insurance policy is there may be coverage for the loss for which your small business was sued, and your insurance company may be able to provide you with a lawyer at no expense to you. If you have liability insurance for your small business, and your small business is sued, the very first thing you should do is contact your insurance company to see if they can be involved. But what else should you do? Is there anything you should not do? Here are five things you should do (or not do) if your small business has been served with a lawsuit:
One thing you should NOT do if your small business gets sued is to panic. Many lawsuits are filed every year, and just because you got sued doesn't mean you did anything wrong. Many lawsuits are dismissed for a myriad of reasons, including you were sued past the statute of limitations, lack of jurisdiction, lack of standing, or even failure to state a claim upon which relief can be granted. Many defenses may be available to you, but you should consult with an attorney to see which should apply.
Get Familiar with the Litigation Timeline
One thing you should do is familiarize yourself 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 has to 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're being sued on a personal guaranty.
Another thing you should do very early on if you're sued is gather documents, or other evidence. 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. This will save you time and money and assist your attorney in a big way.
Hire an Attorney
One thing you must do is hire an attorney, especially if you're sued as an LLC or a corporation. Oklahoma law does not allow you to represent your small 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. In some instances, though, your insurance company will not be able to hire you an attorney, or you may need to hire your own attorney. Either way, you need to hire an attorney and get a case evaluation quickly.
Develop a Defense Strategy
Once you hire an attorney or your insurance company provides one, you need to work with that attorney on developing a defense strategy. You may have grounds to file a counterclaim against the person who sued you (your insurance company's attorney won't do that), or you may decide it's best to settle the case to save the costs of defending the lawsuit. Either way, you need to work with your attorney in clarifying your goals. If you do decide to submit the case to trial, you will also 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 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.
For more information about Liberty Legal Solutions, LLC, please visit our website at http://www.libertylegalok.com/