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What to Do If your Business is Facing a Lawsuit

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Author: Carla Ballatan

Aside from the quite tiring and stressing process of starting your business and finally establishing it into a formal company in full operation, another more stressing for a businessperson is being served with legal documents indicating that he/she was sued.

If this happens to you, what should you do? Here are some tips to guide you on properly handling a legal action against you and your business.

1. Contact your business lawyer immediately - the legal counsel who has known a lot about your business ever since its beginning is the best person whom you can contact and consult with regarding your concern.

Your lawyer is the most qualified person to advice you on your next move. Here are several significant things that your lawyer would be expecting of you to accomplish:

- Collate, in logical and orderly manner all of the major information connected with your lawsuit

- List down all the current addresses and phone numbers of all the parties concerned and the witnesses

- Prepare your statement of position in written form

- Reproduce every important document that may be needed through photocopying. Provide your lawyer both with the originals and the photocopied documents

- Be open with your attorney. As much as possible, share every bit of information about you and your business that may be of help in establishing your defense.

2. Submit an appropriate Insurance Claim - request your agent in the insurance company to submit a claim even if there seems to be no coverage under the insurance policies you are maintaining. Your lawyer may come up with this kind of scheme according to the kind of claim since different types of legal dispute may arise based on the nature of insurance coverage.

3. Refrain from saying anything - allow your lawyer to act as your spokesperson. It is understandable that you become distressed by being sued and would want to discuss with several people the issue at hand. However, it is said that less talk makes less mistake.

4. Investigate - you will also be obliged to investigate on the case being put forward against you and the company. Coordinate with your attorney before probing into anything.

5. Conduct an assessment of your potential exposure to liability - study the following before figuring out the response you ought to give to the lawsuit:

- the amount being claimed for recovery
- any "smoking guns" known by the other side or could become known
- chances of claiming punitive damages and other additional recoveries
- existing claim for recovery of attorney's fees
- chances that the person or group suing you would win the case

From your assessments based on these factors, you can safely start the following:

Closely work with you business attorney and formulate a strong defense plan. Make up several strategies that would likely weaken the suit against you. It is advisable to strategize according to the amount of money you are willing to settle or would be able to afford for recoveries.

Start considering practical consequences of you and your business being involved in a legal dispute.

Make every effort to settle the suit according to sensible business judgments.

About the author: Know the various business laws governing your company with the help of expert Los Angeles business law attorneys at

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