I just got sued! Now what? 6 Steps to Deal with a Lawsuit

Nobody likes to be the defendant in a lawsuit but sometimes you have no choice.  I work with clients who have been sued and who have also filed a lawsuit.  Typically, filing a lawsuit means that efforts to resolve the matter outside of court have failed.  You may have received a demand in the mail for payment of a past due account or perhaps you were contacted by a prior employer who is unhappy that you now work for the competition.  The purpose of this blog post is to provide some guidance on what you should do after the lawsuit has been filed.  

  1. Don’t ignore the summons!  When litigation is started the plaintiff will receive a summons from the court and that summons must be served on the defendant.  Once the summons has been served, the defendant typically has 20 days to file an answer.  If you are the defendant, the answer is your response to the complaint (the allegations against you).  Although it is more complicated than this – you basically either admit or deny the allegations.  You need to be very careful about what you admit in the answer.  If you have an attorney, bring the summons to your attorney right away.  Don’t wait until the 19th day after it was received.  If you don’t have an attorney and can afford one – this would be a good time to hire an attorney to represent you.  If you just ignore the summons it is likely that the plaintiff will move for a default judgment – which means the court will say you lose because you did not defend yourself.  Although there are situations when you can try to get a default judgment reversed, it may not be possible and if you can get the default reversed your legal fees to do so will dwarf the fees you would have paid to just file an answer.  Don’t ignore the summons!
  2. Develop a strategy to deal with the situation.  A very high percentage of cases that are filed will be settled by agreement between the parties and do not go to trial.  However, you should assume that the case will go to trial and prepare accordingly.  What are your defenses to the action?  Do you have any possible claims against the other side?  Do you want to make an offer to settle now?  Do you want to send discovery to the other side to get more information about the case before you settle?  These are all questions you need to ask in dealing with litigation. 
  3. Your lawyer needs to know all the facts.  If you are represented by an attorney you should make sure your attorney knows all the facts about the case.  Even if a fact is embarrassing, bad for your case or something you don’t think will be discovered you should let your attorney know.  There is absolute confidentiality between you and your attorney and it is important that the lawyer knows all the information so they are not surprised if the fact is revealed during the litigation. 
  4. Check to see if you have insurance coverage.  If you carry insurance you should check to see if you have any liability policy that may provide protection.  If the lawsuit relates to a car accident then your auto policy should provide coverage and as part of the coverage will likely pay for an attorney to represent you.  Many insurance policies require that the insurance company be notified when the claim is made.  You should let your insurance company know of a possible claim as soon as it occurs, which may be months before the lawsuit is filed. 
  5. Are there other ways to respond to the litigation.  If the lawsuit has been filed by a credit card company to collect a delinquent account you may want to explore the possibility of bankruptcy.  Is this the first of many lawsuits that you expect?  If you are in a difficult financial situation then you need to explore all the options.  Should you liquidate your retirement account, IRA or 401k to pay the amount due?  Although liquidating retirement accounts may provide a source of funds, because the early withdrawal penalties are so significant you need to be very cautious in taking this step.  Never take money out of your IRA, 401k or retirement account without speaking to a bankruptcy attorney for guidance. 
  6. Explore mediation.  If possible you may want to request mediation of the dispute.  Although mediation does not work in all situations, it is a step that can be very effective in resolving the matter. 

Being the defendant in any litigation is always a stressful situation.  The above six steps will help you deal with the litigation and hopefully bring it to an acceptable conclusion. 

 

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