Steps to Take if Your Business is Facing a Lawsuit in California

A business lawsuit can be a serious matter for a company. Not only can the threat of legal action adversely impact a company’s reputation, but it can also harm its bottom line. If your company is facing litigation, it’s important that you understand the accusations against you and take proactive measures to protect your interests. Here are five essential steps to take if you’ve been served with a business lawsuit:

1. Thoroughly Review the Complaint

The first thing to do if you are facing a business lawsuit is thoroughly review the complaint with which you’ve been served. There are many different types of legal actions that can be taken against a business, depending on the circumstances. You should also consider how the legal claims being made in the document can affect your business in the future.

Critically, you only have a limited amount of time to respond to the complaint to ensure your business interests are protected (usually 30 days from the date you were served). Failure to timely answer can result in the court entering a default judgment against you.

2. Gather the Evidence You Need

Organization is crucial if you are preparing for a business lawsuit. It’s vital to gather all records, information, and evidence that will support your position — this can often take a considerable amount of time. However, this documentation may be necessary to present a strong case in court. Your attorney will also need to review the information to safeguard your interests and develop a comprehensive strategy in your case.

Notably, you should never delete, destroy, or alter any evidence that could be used against you. If you’ve received a data preservation letter and deliberately destroy any documents, physical objects, electronically stored information, photos, video footage, or other evidence that should have been preserved in the case, you could face sanctions for spoliation.

3. Notify Your Insurance Company

Many companies have insurance policies in place to protect them against business lawsuits. These policies typically require a business to promptly notify the carrier in the event they are facing litigation — and the notification requirements are often stringent. A company’s failure to inform the insurance company in a timely manner about a pending legal action could potentially result in a forfeiture of rights under the policy. Significantly, if your insurance policy covers the type of suit you are facing, it may pay for your attorney fees, court costs, and any judgment or settlement you might be held liable for paying.

4. Consider Your Dispute Resolution Options

Litigation isn’t always the only way a business lawsuit can be resolved. In many cases, alternative dispute resolution can be used to help the parties reach a resolution without going to court, and with less conflict. Methods such as mediation or arbitration can offer many benefits, including privacy, efficiency, and cost-effectiveness. In addition to avoiding the complexities that can come with the time-consuming and formal litigation process, alternative dispute resolution can also ensure the parties have more control over the outcome of the case.

With mediation, the parties to a business lawsuit work together to reach an agreement with the assistance of a neutral third-party called a mediator. This form of alternative dispute resolution is informal and allows the parties to find creative solutions that meet both their needs — it can also help to maintain amicability, which can be important when it comes to preserving ongoing business relationships. Arbitration is a procedure that uses an impartial third party called an arbitrator to render a decision in the case. Although arbitration is similar to a mini trial, the rules of evidence are much more relaxed than in litigation, and there is no formal discovery process.

5. Consult with a Business Litigation Lawyer

Whether the business lawsuit involves a breach of contract, a conflict between partners, an intellectual property battle, an employment dispute, or any other issue, it’s vital to have counsel by your side who can assist you with navigating the legal process. A knowledgeable business litigation lawyer can evaluate your case, advise you regarding your options, draft documents, represent you in court or alternative dispute resolution proceedings, and negotiate on your behalf. It’s best to consult with a business litigation lawyer as soon as you know a business lawsuit is imminent to avoid making any mistakes early on in your case that could affect the outcome.

Contact an Experienced California Business Litigation Attorney

It’s imperative for companies to protect their rights and safeguard their interests when faced with a business lawsuit. The business litigation attorneys at White & Bright, LLP are committed to assisting companies of all sizes in California with a wide variety of business litigation matters and work diligently to obtain positive results in every case. We welcome you to contact or call us at (760) 747-3200 to learn more about our legal services.