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Dealing with a lawsuit against your business

Business owners in California may agree that a lawsuit is one of those events that can demoralize and discourage you, especially if it comes from within your company. However, no matter the source of the complaint, you are looking at a threat to your company's productivity, reputation and finances. Taking appropriate steps from the first moments after hearing of an action against you can make all the difference in the outcome.

The most prudent first step is to seek legal counsel. You will want to deal with an attorney who has experience in business litigation and who will give you clear and frank answers to your questions. Your lawyer will provide you with precise directions for proceeding, potentially including some of the following general suggestions.

Responding to the lawsuit

When your business is facing a lawsuit, your first instinct may be to arrange a meeting with the plaintiff to find out what is going on. However, many legal experts agree that any communication with the plaintiff should be handled through your respective attorneys. Everything you say and do is under scrutiny from the time your opponent files the lawsuit. Your desire to smooth things over may have a detrimental effect on your defense.

Instead, carefully review the complaint with your attorney and decide how best to proceed. You will have several options, including these:

  • Admit to the allegations
  • Fight the allegations
  • Counter-sue the plaintiff
  • Offer to try mediating a settlement

At this point, you may benefit from contacting the provider of your business insurance policy. Your agent will clarify the terms of your policy and whether the current action against you falls within the coverage of your policy. You may also need to forward a copy of the complaint to your insurance provider.

Working with your attorney

Over the following months, you will be relying on the skill of your defense attorney. In order for your legal counsel to adequately defend you, he or she will need your complete honesty and cooperation. Remember that your defense of this case may determine the future of your business, so you will want to proceed with dignity and professionalism.

When the lawsuit is resolved, your next step may be reviewing any company policies that allowed the situation to evolve. This may mean reviewing management's reaction to harassment claims, your standards for protecting intellectual property or your contract language.

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Chodos & Associates
1880 Century Park East
Suite 615
Los Angeles, CA 90067

Toll Free: 866-986-7255
Phone: 310-598-3405
Fax: 310-203-3866
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