What to Do When Someone Sues Your Business

Whether a full-blown class action or a complaint from a single consumer, lawsuits typically come as a shock to small business owners and do serious damage. Regardless of whether or not you believe their case to be valid or justified, consumer lawsuits and class actions have the potential to destroy your business. However, if properly handled, you may be able to protect your business’ reputation and future. If your business has been served, here’s what you should do:

  • Consult with an experienced business litigation attorney immediately. Don’t attempt to wade through legalese, respond to complaints being brought against you, or engage in any back-and-forth with the filing party or their lawyers. In many cases, a productive conversation between both sides’ legal representation is enough to avoid a messy court battle. An attorney can also help you determine whether or not your opposition has a viable case and advise you on how to proceed.
  • Collect all evidence and review it with your lawyer. Even if a piece of potential evidence only seems loosely related to your case, hang on to it. Gather all relevant business and communication records, including digital records, and make sure nothing is missing.
  • Communicate with your insurance company about the lawsuit. Even if you are only being sued by one client, your insurance company may be able to help you cover certain effects of the lawsuit, such as accusations by consumers that they suffered financial loss due to your business’ practices, policies, or products. However, your insurance company is unlikely to cover the whole cost of the lawsuit, except in some circumstances. An attorney can help you evaluate what your insurance company is obligated to do on your behalf and ensure they provide contractually agreed-upon coverage.
  • Refrain from correspondence with the complainant. Do not respond directly to the initial letter from the consumer or their attorney, and certainly do not respond or attempt to speak to the consumer during the course of the lawsuit, as any and all communication can be used against you in court and can be detrimental to your case. As soon as you are notified of the class action being brought against you or receive a letter from a consumer’s lawyer, and you are given 30 days to issue an official response. You and your business litigation attorney will work together to craft a response that admits or denies the truth of the accusations, presents your defense, and puts forth your desired method of resolution, whether it be mediation, a trial, or otherwise.
Skip to content