What to Do if Your Small Business is Faced with a Lawsuit

lawsuit information on paperIf your business was slapped with a lawsuit, would you know what to do? While no business owner wants to be faced in such a situation, anyone in business has to deal with the possibility of being sued. Whether you’re a small business owner or manage a large corporation, chances are that, over time, your business will have to deal with a lawsuit. What would you do if you were sued? Would you know what steps to take? Notable entrepreneur Barry LaBov provides professional advice for business owners if faced with a lawsuit.

Contact Your Attorney

As soon as you learn your business is facing a lawsuit, you should contact an attorney immediately. Even if you believe that the lawsuit has no credibility or that the accusations are false, always speak to an experienced lawyer who can provide you with the proper counsel and protect your interests. When you speak to the lawyer, provide as much detail and thorough information as possible about the lawsuit and what may have caused it. The more your lawyer knows, the better he or she can represent and defend you or settle the case.

Investigate the Claim

It’s highly recommended that you avoid discussing the matter with anyone inside or outside of your company besides your lawyer, unless it is absolutely necessary. For example, it makes sense for you to discuss the situation with your business partner. Take the time to conduct an internal investigation and collect relevant information relating to the lawsuit, such as contracts, invoices, e-mails, letters and other such materials. You should also prepare a written report of the event that sparked the lawsuit and gather statements from anyone involved.

Check Your Insurance

You should contact your insurance company immediately and inform them of the lawsuit. They will let you know if your situation is covered under their policy or not. In most cases, accidents are covered claims, whereas issues like contract disputes and fraud are not. But you should always check with your insurance company to make sure. In addition to protecting company assets, liability insurance may cover the cost of legal defense if necessary.

Create a Plan of Action

Speak with your attorney to create a plan for your defense and outline how you should respond to the matter. Should you or can you counter-sue or should you settle? Consider all the options and which is best for your specific case.