Vicki Haskett, Negosentro | A lawsuit is something every business owner dreads. It is one of the most difficult issues an owner has to overcome since it involves various processes including documentation, hearings and more. When a client, employee, customer or competitor files a lawsuit against your business, it can cause damages.
A lawsuit can affect a business owner’s finances, reputation and clientele. This is why it is normal for businesses that are being sued to feel anxious, pressured and overwhelmed. It requires a lot of time, resources and paperwork, which can affect the general operations of the business.
How A Lawsuit Can Affect Your Business
Businesses avoid getting involved in a lawsuit because of the negative effects it can cause a business. Most of them practice precautionary measures in order to appease any client, customer or competitor who is threatening to sue. Some of the reasons why include:
- Damage to Reputation – If a lawsuit has been filed against your business, it can do great damage to your business’ reputation. Tainted business reputations can cause the venture to lose money. Clients, customers and suppliers will now think twice before working with you because you are being sued.
- Lawsuit Costs. Most lawsuits take long time before a verdict is made. Paying for lawyers as well as the penalties and damages to plaintiffs are expensive. You lose money and you will have difficulty in getting back the money because your business’ clientele is also affected.
- Owner’s Morale. Getting involved in business litigation can affect the business owner’s morale. There may be emotional pressure on the part of the owner, as he or she will have to deal with hearings, settlements and anything related to the case.
- Business Relationships. Litigations damage relationships between suppliers, clients and employees. Feelings and emotions may be affected because of a lawsuit.
Points to Consider
Although measures can be done before a lawsuit is filed, there are plaintiffs who cannot be placated and proceed to sue. Legal help is available whenever your business needs to address and tackle the lawsuit. It is important to know how to properly handle this kind of situation before it does further damages to your company.
- Hire a competent lawyer. Hire a lawyer who knows what he/she is doing in order to be sure that you and your business are in good hands. Communication is key when it comes to litigations so avoid a lawyer who does not communicate well with you.
- Discuss the lawsuit with your lawyer. Never communicate to the plaintiff without the presence of your lawyer. Discuss everything with your lawyer and be sure to keep all the details and records, even the smallest ones, that are related to the case. Never cover anything up. Be honest with your lawyer, as facts will come out as the lawsuit progresses. Honesty helps your attorney to avoid being surprised.
- Discuss the lawsuit with your insurance company. Lawsuits are costly. Therefore, it is important to discuss the lawsuit with the insurance company that covers your business. Never assume that your insurance policies will cover the lawsuit.
- Be mindful of what you say or how you act. Business owners are often reminded to watch what they say and keep their actions in check, as everything can be used against them during a lawsuit. It is important to avoid anything that the plaintiff can use as leverage.
- Decide with your attorney. Once the litigation is filed, you have to decide on how to approach it with your lawyer. Most litigations require you to provide a written reply on the following:
- Your denial or admittance to the complainant’s allegations.
- Your counterclaims or defense against the defendant.
- Your choice to have an out-of-court settlement or a jury trial.
Before you submit your response, it is important to do everything with your lawyer. Never make any decisions without consulting your attorney.
- Be prompt. Be diligent in attending to your litigation. The more delays you have in responding to your lawyer’s queries and requests, the more money you lose.
Never ignore the lawsuit. Take it seriously in order to solve it the right way. Despite the litigation, it is important to stay focused and remember that you are still running your business. Separate yourself from your venture. Personal feelings such as anger and frustration should not affect the way you run your business.
Doing what is Best for Everyone
Study your options with your lawyer. It is always best to choose the solution that will benefit both plaintiff and defendant. This way, no grudges will develop. As a business owner, do not forget to rebuild your business. It may lose the good reputation you built but it is possible to rebuild it again. Remember why you started your venture and let that fuel your passion to continue it.
Vicki is a law writing enthusiast who’s had over 25 years of experience in her field. She enjoys sharing her experiences with those who want to learn more about the legal world. In her spare time she spends quality time with her family and friends.