I’ve Been Sued!  Now What?

Dealing with our litigation system can be frustrating, expensive, time-consuming and emotionally draining, but for most contractors, litigation is an unfortunate fact of life.

The key to effectively dealing with litigation is to know what you should and should not do and make certain you are aligned with the right attorney, insurance broker and insurance company.

What are the first things you should do if you are sued?

  • Call your broker or notify your insurance company as soon as possible.
  • Contact your corporate attorney and seek his/her advice.
  • Do not give statements or discuss the case with anyone other than your insurance agent, a representative of your insurance company, or your attorney.
  • If necessary, contribute to a settlement in proportion to what is and is not covered. (Some lines of coverage like Directors & Officers liability may require this.)
  • Secure all evidence, records, and documents that may be needed for the defense of your case.
  • Identify witnesses and employees who have knowledge of the incident.
  • Provide full cooperation to your insurance company’s claims staff and to your defense counsel.

Someone once joked that “every American is entitled to their decade in court!” While this may be a stretch, it is not uncommon for litigation to drag on for years.  It is estimated that a case that goes through trial will cost the principal dealing with the problem 125 hours of time at a minimum!  This doesn’t include the time spent by other employees who have to compile the necessary information, be involved with interrogatories and depositions and deal with other legal related matters.  Because litigation is so expensive, time-consuming and frustrating, it is almost always in your best interest to try and resolve a matter prior to litigation.  If face-to-face negotiation fails, you should consider some type or types of Alternative Dispute Resolution (ADR). 

The importance of communication in resolving business disputes cannot be underestimated.  Litigation is a horribly time-consuming, expensive, emotionally draining and frustrating process. There certainly are situations when two parties simply won’t be able to resolve their differences, and some type of adjudication is necessary; however it is strongly recommended that you make every possible effort to resolve your business conflicts amongst the parties involved.  Arbitration or litigation should be your last resort.