You started a business. You survived your first year. You started to make money and hire employees. You continue to expand. Congratulations! You have beaten the odds. Until … you suddenly find your business involved in its first lawsuit.
Maybe it was a contract that went sideways, or an employee who decided to steal your stuff, or perhaps a government agency showed up to investigate. Whether you have been served with papers, or are about to be, it is clear that your business is going to be involved in litigation.
One of the best pieces of life advice I ever received came from the book The Hitchhiker’s Guide To The Galaxy by Douglas Adams. I was lucky enough to have been introduced to the book by my father when I was about 10 years old. In that book, an average guy is trust into an unbelievably bizarre situation for which he was completely unprepared. The repeated advice he gets is: “don’t panic.” That simple, two-word piece of advice works well in many situations in life, especially when you’re involved in litigation.
Look, I get it. Being involved in a lawsuit is stressful. I have worked with many business owners who were facing litigation. None of them enjoy it, and almost all of them show at least some signs of panic at one point or another. However, I can tell you from experience that panic is never productive. It almost always causes business owners to take counterproductive actions or fail to take productive ones.
So, if you shouldn’t panic, what should you do instead?
As a business owner, your first move, when you become involved in a dispute, should be to contact a business litigation attorney for advice. If you don’t have one already, then get one.
However, remember, “don’t panic.” Talking with a qualified attorney should be your first move, and you need to do it quickly, but don’t do it in a panic. If you are looking for an attorney, get some referrals from other business owners, check the web for local business litigation attorneys, and set up a few consultations with attorneys. Most attorneys will sit down with you for a free 30-60 minute initial consultation. Use this time to interview a few attorneys and find one who fits. Remember, this is similar to hiring anyone else for your company. Try to find someone who is experienced in commercial litigation, who generally understands your business, and who you can work with personally (remember, many commercial lawsuits can last for years). Move quickly to find the right attorney, but don’t make a panicked decision.
The reason you need to do this right away but also do it properly and carefully is simple: When you are in a new situation, you need advice from someone who is experienced in that situation. No matter how simple the dispute may seem to you, there are almost certainly things you aren’t considering or mistakes you’re making. In business litigation that person is a business attorney you feel comfortable working with who is knowledgeable about and attentive to your needs.
Often, especially if someone has sued your business, you may feel the urgent need to get your story out. This could be talking to the press, calling the other attorney, or calling the person that sued you directly. This is a mistake. In the heat of the moment, many business owners will inadvertently say something that eventually hurts their case. It is always better to wait and say nothing than to make comments in a moment of panic. Laws relating to businesses can be complicated. Words that a layperson might think is a defense might actually prove something that harms your position. Don’t panic and spend your energy finding an attorney.
Now, this is not to say that there is never a time to talk to the press or call the other side. Indeed, there are many occasions where talking can be a great way to resolve a case and contain expenses. However, those communications should be carefully analyzed and planned with the help of your attorney. Like other business efforts, you want to get the maximum return for your statements, and you can’t do that if you make them during a moment of panic.
I have seen this come back to hurt more than one business. Usually it happens something like this: at the very initial stages of litigation, someone at the company panics and tries to either hide something or correct a perceived ambiguity. That person then attempts to alter or destroy one or more documents or emails. Later, it comes out during litigation that the alteration or destruction happened. The other side uses this to argue that the company is lying and is not reliable. The court often agrees and it is always bad for the company that altered or destroyed documents. Most of the time when this kind of thing happens, it was a result of panic by someone.
Can I guarantee that if you destroy something it will be discovered in litigation? No. But I can tell you, from experience, that these things have a way of coming out. In the digital world we live in, it is very difficult to destroy all traces of a document. Commercial litigation attorneys and any investigators or specialists they employ can be very good at digging these things up. The consequences can range from a monetary penalty (which can include the other side’s attorneys fees), to a jury instruction in favor of the other side, to an adverse assumption that there was something damaging to your case that was destroyed (even if it wasn’t or didn’t actually exist). Whatever the case, it is almost always bad.
The bottom line is that you need to keep a cool head when your company becomes involved in litigation. Find a good business attorney and develop a smart plan for the case. Panic won’t help you think clearly. So don’t do it. If you start doing it? Stop. It may not always be easy, but it’s very important.