Business litigation cases cost companies billions of dollars every year. In 2019, large corporations spent an estimated $22.75 billion on litigation-related expenses, according to BTI Consulting Group. That figure was expected to climb even higher in 2020 and 2021, according to BTI Consulting Group’s Litigation Outlook 2021, which surveyed corporations with annual revenues of $1 billion or more. For such corporations, litigation spending was projected to be $22.8 billion in 2020 and $23.71 billion in 2021.
Smaller corporations and businesses spend billions of dollars each year responding to lawsuits and other business litigation-related matters. Overall, businesses spend an estimated $1.5 million each year for every $1 billion in revenues, according to Norton Rose Fulbright’s 2019 Litigation Trends Annual Survey.
With so much money at stake, it’s critical that companies take business litigation cases seriously right from the start. But what should a company do in response to a lawsuit? What steps should businesses take to minimize the financial impact of such legal action? Can lawsuits be easily dismissed? What other options exist? Our experienced business litigation attorneys at Eller Tonnsen Bach, LLC explain what your company needs to know.
Steps to take when your company has been sued
The following steps are meant to serve as a general guide for how a business should respond to being named in a lawsuit. However, it’s important to understand that every legal case is different. As a result, companies are strongly advised to consult with an attorney as soon as possible about a pending legal matter.
Here are the suggested steps companies should take if faced with a lawsuit:
- Do not immediately respond – While it may be tempting to do so, do not respond verbally or in writing to the person or business taking legal action against your company. Anything you say or write could later be used as evidence in a court of law against your business.
- Do not ignore the lawsuit – While it’s important to take your time to carefully consider your legal options, you should not wait too long to respond to a lawsuit. Many states have strict deadlines (known as statute of limitations) for responding to legal action. If you miss that deadline, your company could miss out on certain opportunities to respond effectively to a lawsuit, including requesting having the lawsuit dismissed
- Take the lawsuit seriously – Even if you think the lawsuit does not have any merit, it’s important for your company to take such legal matters seriously. If the lawsuit is successful, it could negatively impact your business financially and even potentially threaten the future of your business.
- Do not destroy evidence – Evidence related to pending litigation must be preserved in legal matters. Destroying evidence can sometimes result in criminal charges depending on the nature of the lawsuit and the evidence that is destroyed. In many cases, your company is required by law to disclose certain information in many lawsuits.
- Contact an attorney – The sooner you consult with a lawyer in such situations, the better. A business-savvy attorney familiar with the applicable state and federal rules and regulations can help your business respond effectively to the lawsuit in many different ways. This may include:
- Analyzing the lawsuit to determine the merits of the complaint.
- Reviewing any applicable contracts or legally binding agreements.
- Filing a motion in the applicable court of law to have the lawsuit dismissed.
- Carefully researching your case based on case precedence and applicable laws.
- Filing a countersuit against the person or business that filed the lawsuit.
- Drafting or reviewing a settlement offer to resolve the lawsuit.
- Preparing a case for trial.
Experienced business litigation attorneys understand how the legal system works when it comes to lawsuits involving corporations and other businesses. Your lawyer can explain the different legal options available to your company based on the specific circumstances of your case and an in-depth understanding of business law.
Sometimes, taking an aggressive legal stance may be the best approach to addressing a lawsuit. Other times, hiring a mediator or arbitrator to resolve the dispute may be a more effective strategy. In each case, an attorney can serve as your company’s guide and help navigate your business toward a positive outcome.
A business litigation attorney should also be mindful of the urgency and expense often associated with many lawsuits. Specifically, a lawyer should be conscious of legal fees and work to resolve your case in a timely, cost-effective manner. That’s why it’s important to discuss fees and a law firm’s approach towards resolving cases. That way, there are no surprises later.
To learn more about your business’ legal options in response to a lawsuit, contact our law firm to schedule an appointment with one of our award-winning, highly-skilled attorneys. We have three offices in South Carolina (Greenville and Charleston) and North Carolina (Charlotte) to better serve our clients. Our firm has extensive experience working with companies of all sizes, including Fortune 500 corporations. We’re also an approved panel counsel law firm authorized to work with insurance companies.