Successful business owners likely have not endured the process of being sued so once it happens they are often wondering what to do. First, contact your insurance agent to notify them of the suit. Your General Liability policy may cover the costs of the defense (including legal fees) and any judgments.
While you are waiting on the insurance company to respond contact your own lawyer. If the insurance policy doesn’t cover the claim you will be responsible for hiring your own lawyer. There is only a certain time frame to file a legal answer in court or a default judgment could be entered against your business. In Alabama Circuit Court cases there is a 30 time time frame (14 days in state District Court)to file a legal answer or risk a default judgment.
You need your own lawyer to determine whether a suit of your own (counter-claim) should be filed. In many jurisdictions they are required to be filed at the time of the legal Answer (compulsory-counter-claim). The insurance lawyer will likely not be authorized to handle this matter.
AVOID calling the Plaintiff and venting your frustration. Remember that any thing you say as a representative of the Defendant company will be used against you. However, if a lawyer communicates the same information then it is not admissible in court.
If the suit involves a lease or a line of credit, the creditor often requires a small business owner to sign a personal guarantee which means your personal assets could be at risk.
Rutledge & Yaghmai helps small businesses navigate through suits on a daily basis. Call us for a free discussion to see the best steps to defend your small business in court.
