My Company Has Been Sued—What Now?
Your company has been sued. It happens. Sooner or later, most successful companies will face one type of lawsuit or another. When your company is facing a lawsuit, resolving the plaintiff’s claims without unnecessary liability involves taking the same informed and strategic approach that you take to all other business-related matters.
So, what now?
To make informed and strategic decisions, you need to have a clear understanding of the litigation process. You also need to have a clear understanding of your company’s risk exposure resulting from the plaintiff’s lawsuit. At this step, there are both steps you need to take and mistakes you need to avoid, and you will need to work closely with your company’s Miami commercial litigation attorney as you work toward bringing the lawsuit to a favorable resolution.
7 Important Considerations When Your Company Has Been Sued
There are several important considerations involved in responding to a commercial lawsuit. Some of the key considerations include:
1. The Deadline to Respond (and the Risk of Default Judgment)
Once a plaintiff files a lawsuit and properly serves the defendant, the clock starts ticking for the defendant to file a response. Under the Florida Rules of Civil Procedure, defendants typically have 20 days from service to file an answer. Under the Federal Rules of Civil Procedure, the deadline to file an answer is 21 days in most cases.
If your company does not file a timely answer, then the plaintiff can seek a default judgment. Essentially, this involves asking the court to grant the remedies requested in the plaintiff’s complaint based on your company’s failure to respond. As a result, a timely response is critical, and this means that it is important to engage defense counsel promptly.
2. Evaluating and Asserting Counterclaims
In many cases, the best defense to a commercial lawsuit can be a strong offense. If your company has counterclaims against the plaintiff, you will want to identify and assert them promptly. Under both the Florida and Federal Rules of Civil Procedure, certain counterclaims are classified as “compulsory.” This means that they must be asserted at the first available opportunity. As explained in Florida’s Rule 1.170(a):
“Compulsory Counterclaims. A pleading must state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, provided it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction.”
Importantly, there are exceptions to the compulsory counterclaim rule at both the state and federal levels, and certain counterclaims are classified as “permissive,” which means that they may be filed at any time. Even so, timing can be important from a strategic perspective; and, here too, engaging defense counsel promptly is critical for evaluating your company’s options and formulating an overall litigation strategy.
3. Indemnification and Third-Party Claims
Along with evaluating potential counterclaims, when facing a commercial lawsuit, it is also important to assess the applicability of any indemnification rights and the potential of shifting liability through a third-party claim. Many commercial agreements include indemnification clauses that require one party to defend and hold the other harmless in the event that the other gets sued. If the plaintiff’s pending lawsuit implicates any of your company’s indemnification rights under a third-party contract, then your company may be entitled to effectively extricate itself from the litigation.
Even if none of your company’s indemnification rights apply, your company may still have the option of filing a third-party claim. Is a subcontractor or independent contractor responsible? Was your company relying on a vendor’s services, or was a vendor acting on your company’s behalf? There are a variety of possibilities—and these are options that you will want to discuss with your company’s defense counsel as well.
4. Litigation Risk Assessment
While it is important to consider potential counterclaims and third-party claims, it is also important not to overlook the need to defend against the allegations in the plaintiff’s complaint. When facing a lawsuit, it is imperative to conduct a comprehensive litigation risk assessment as efficiently as possible. Are the plaintiff’s allegations valid? If so, what evidence is available to substantiate the allegations? Does it appear that the plaintiff is prepared to litigate through trial, or is the plaintiff more likely to be focused on settlement? These are just a few of the numerous questions that need to be answered.
5. Assembling the Litigation Team
Responding to a commercial lawsuit is a process that requires a skilled and organized team. A litigation team will generally include the company’s outside litigation counsel, its in-house leaders, and subject matter experts (SMEs) from within the organization. Each member of the team should have a clear role to play, and the team should have clear lines of communication to ensure that counsel receives all necessary information in a timely manner.
6. Litigation Hold and Preparing for Discovery
When facing a lawsuit, it is necessary to implement a litigation hold (or “legal hold”). This is an internal order not to destroy or delete any records or electronically stored information (ESI) that could potentially be relevant to the plaintiff’s claims. Failure to implement an effective litigation hold can lead to sanctions during discovery or at subsequent stages of the litigation.
7. Settlement Considerations
Finally, if your company has been sued, it is also important to give due consideration to the possibility of settlement. If settling is your company’s best option, then it may be in your company’s interest to focus on settlement from the outset. Conversely, if settling is not your company’s best option, this is a fact you need to know as well—and it is a fact that will inform how you approach the litigation process.
Speak with a Miami Commercial Litigation Attorney in Confidence
Has your company been sued? If so, we can help, and we encourage you to contact us promptly for more information. Call 305-768-9909 or contact us online to speak with an experienced Miami commercial litigation attorney in confidence.