For many companies, the threat of litigation is simply one cost of doing business. Most organizations that have been around for any length of time have probably had to respond to a lawsuit in some way, shape, or form. It’s important to maintain a level head if your company is facing legal action. How you chose to respond could very well determine the future trajectory of your business.
Determine the underlying issues
The other party’s claims should drive your response. It’s crucial to understand the underlying issues behind the lawsuit. Is the other party alleging a breach of contract? Does the claim involve a defective product? Were there physical injuries? Does the suit involve matters of copyright or trademarks? Once you understand the nature of the allegations, you can start to plan your next steps.
To settle or not to settle
When you’ve identified the basis for the lawsuit, you will have to decide whether you want to settle before going all-in on litigation. It can be tempting to settle, file a claim with your business liability insurance provider and move on. In some cases, this may be the proper response, even if you are likely to prevail in court. However, in other instances, it may be worth the time and expense to push back. Perhaps the reputation of your company is at stake. Maybe you wish to send a message that you won’t tolerate frivolous lawsuits. Regardless, you will need to weigh your pride and proving a point against the time and expense of battling it out in court.
You don’t have to go it alone
Whether it’s your first time facing a lawsuit or if your company has been down this road before, it’s stressful to have to do battle in the legal arena. You should always discuss your options with a legal professional. Together, you can help determine the proper response to a business lawsuit.