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When a small business gets sued

No small business owner wants to open their mail on Monday morning and find a letter from an angry customer or former employee, or even worse, a notice from the local court. While some legal correspondence is a matter of formality and doesn't signal any greater trouble, it's important to take the time to look into each possible claim against your business and figure out if it needs to be resolved.

One useful way to begin figuring out how to respond to a letter from an angry client or former employee or a notice from the court is to check your company's insurance policy. Businesses often have the option to add-on policies that cover different types of litigation, and it may be worth investing in one of those policies in case a lawsuit arises.

Next, revisit contracts that you've made with suppliers, distributors, and other small businesses that you contract with. An experienced contract attorney will be able to tell you if there are terms in any of those agreements that assign responsibility for legal costs or that offer immunity from suit to one party.

Another important thing to remember if your small business is facing litigation is that it's illegal to destroy evidence or try to otherwise conceal it. On the other hand, you could save time and strife by beginning the process of isolating relevant information early and making it available for your attorney early in the process. This can be particularly important in the event of a lawsuit brought by a former employee who is alleging discrimination or another type of wrongful termination. Having complete records of your side of the story can help keep the claim out of court and ensure that you come to a mutually agreeable solution with the unhappy former worker.

Source: Businessweek, "When a Small Employer Gets Sued by a Former Worker," Karen E. Klein, Oct. 22, 2012.

Our Fairfax County law firm handles many different types of business litigation. More information is available on our website.