So, You Have Been Sued…What Should You Do?

Litigation is a business risk that unfortunately most businesses will have to deal with at some point. Knowing what to do once you get sued and understanding the procedure will help make the process easier for you.  As your business grows, so does its chance of being involved in litigation whether it be with a former client or customer, a business partner, vendor, or an associate/employee. Despite the parties involved, as with any litigation, the plaintiff (the party filing the Statement of Claim or Complaint for the lawsuit) will have to serve the defendant (the party being sued).

If your business is sued, it will have to be served with process[1] for the court to have jurisdiction (meaning the power of a court to decide on the merits of a case and issue orders) over it. This also provides the court with the power to render a decision and to order the parties or take other actions. Likewise, if you are named as an individual in the lawsuit, you will also have to be served with process.

Upon being served, a defendant generally has just 21-30 days to respond by either filing an answer or some other responsive pleading; the actual deadline will vary by jurisdiction and the type of case. Be sure to confirm the deadline with the clerk of the court in which you are being sued or consult an attorney. This step is very important as a failure to timely answer or respond will likely result in a default against you. If a default judgment is entered against you, the plaintiff may try to collect the money or remedies sought against the defendant, which may include garnishment of wages, garnishment of bank accounts, or freezing of accounts. If you are served with a lawsuit, consult a licensed professional to review your options to respond as quickly as possible to avoid delay and unfavorable outcomes.

Options to Respond:

There are several options and strategies that can only be pursued at the very beginning of the case such as motions to dismiss for lack of jurisdiction, motions to change venue or motion to compel arbitration. These sorts of responsive pleadings must be filed at the outset of the case but could be strategically beneficial. To get started, work with counsel to take the following steps:

1. Answer: Provide your answer. Your answer is your side of the story. It is straightforward and individually responds to each allegation in the complaint. You usually have these three options: (1) Admit, (2) Deny, or (3) Admit/Deny in part. If you deny, you must state the reason for your denial. To avoid waiving any possible affirmative defenses, you should also include them in the answer.
   
   
2. Raise a Defense: You can also use your answer to raise defenses. A defense provides a good reason the plaintiff should lose the case or not get what is requested in the complaint. Here, the defendant can introduce evidence, which, if found credible can defeat liability. There are several affirmative defenses provided for by the law that you can raise, such as Statute of Limitations, Fraud, Waiver, Duress, among many others. Raising an affirmative defense does not prevent a defendant from also raising other defenses. 
   
   
3. File a Counterclaim: You can also file a counterclaim if the plaintiff harmed you. A counterclaim tells the court you believe the plaintiff owes you money or some other relief.
   
   
4. Motion to Dismiss: A motion to dismiss is a pleading that asks the court to dismiss all or part of the lawsuit and must be filed within the same amount of time as an Answer. If the court determines that the facts alleged in the Complaint meet muster and denies your motion to dismiss, you should be prepared to answer the lawsuit. The time to answer the lawsuit is extended until 14 days after the motion to dismiss is denied or if otherwise determined by the court or stipulated to by the parties.

Filing an answer, defenses, counterclaims or other dispositive motions does not mean the case will go away. It’s an opportunity to share with the court your position and your side of the facts. After your answer is filed, there will be other papers filed and court hearings to attend. Typically, most plaintiffs and defendants attempt to resolve the case through negotiation or mediation, prior to going to arbitration or trial with a judge or jury.

Lawsuits negatively affect businesses. They are costly and time-consuming, and they can ruin relationships and a business’ reputation. But if you ever find yourself in this situation, find a strong litigation attorney to protect your interest.

The litigation attorneys at Jacko Law Group advocate for our clients through the whole process, from pre-litigation to negotiations and the proceeding.  If you have a dispute or litigation matter, please call 619.298.2880 or email [email protected].

Author: Dharmi C. Mehta, Esq. is a Senior Attorney, at Jacko Law Group, PC (“JLG). She focuses her practice on representing the firm’s clients in complex business disputes, and transactional matters for investment advisers, broker-dealers, financial professionals, and advisers to private funds.

JLG works extensively with investment advisers, broker-dealers, investment companies, private equity and hedge funds, banks and corporate clients on securities and corporate counsel matters. For more information, please visit https://www.jackolg.com/.

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[1] Service of process refers to the delivery of the legal documents that gives a defendant notice of the legal action filed against it and the opportunity to respond. Valid service of process on a defendant is required by the U.S. Constitution. Service of process must be accomplished by the plaintiff pursuant to the rules or statutes of the appropriate jurisdiction. These rules include how process documents can be delivered (such as in-hand delivery or certified or registered mail) and to whom that delivery can be made.