If you are sued – Five things you should know about litigation

business litigation

“Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker the lawyer has superior opportunity of being a good man. There will still be business enough.” Abraham Lincoln

Being sued is stressful. Litigation brings visions of ruthless attorneys, reams of papers and endless money spent on legal fees. However, taking an active, early role in the litigation matter can reduce your risk, cost and stress level. Below are five things you should know about litigation if you face a lawsuit.

1. Don’t wait. You typically have only 30 days at the most to answer a complaint before the plaintiff can start the process of entering a binding default judgment against you. Once the default judgment is entered, the plaintiff can then garnish bank accounts and wages, put liens on property and seize assets. The standard for setting aside a default judgment is high. To avoid losing your rights, calendar a response date on the complaint right away and don’t let it pass without answering the complaint or taking other appropriate legal action.

2. Consider hiring an attorney. In Michigan, an officer or director of a corporation or other legal entity generally cannot represent the legal entity or sign court documents without engaging in the unauthorized practice of law. While an individual can represent themselves in pro per, the law and the rules are complicated. Before representing yourself in court, weigh the costs of hiring an attorney against the advantages of having the expertise of counsel. If you decide to hire counsel, be proactive in choosing counsel and negotiating retention agreements. Many attorneys will give you a free initial consultation, negotiate alternative fee arrangements, and work within budgets to keep down your costs.

3. Be active in the case. Once you hire an attorney, stay involved in the case. Review pleadings before they are filed. Ask questions and understand the strategy of the case. This will not only help control legal fees and costs, but potentially lead to a better outcome since your attorney will better understand the facts and your ultimate goals in the litigation.

4. Be prepared for trial. While most cases settle, your attorney should be prepared to take the case to trial if necessary. This means understanding all the facts, reviewing all the documents, identifying witnesses, and knowing the strength of your ultimate legal position early on in the case. And be sure to preserve all relevant documents to avoid giving your opponent arguments on spoliation of evidence. Being ready and willing to go to trial gives your attorney leverage in settlement negotiations against attorneys who are less prepared or do not have trial experience.

5. Settle when it makes sense. It is easy to get emotionally involved in a litigation matter to the point that the idea of settling the case is off-putting. However, unless you have a point to make for future cases or some other critical reason for trying the case, consider settlement from a practical standpoint. Factors to consider include the cost of trial, the likelihood of winning at trial, your potential exposure and the risk of adverse publicity if you lose at trial.

If you are faced with a lawsuit, understanding and taking an active role in the litigation can help minimize risk, control costs, reduce stress and reach an outcome in line with your overall objectives.

Scroll to Top