What to Do if Your Company Is Sued

  • Contact a Litigation Attorney and your Insurance Company
  • Do Not Ignore the Complaint or Try to Represent Your Company
  • Do Not Attempt to Represent Your Company Yourself
  • Take the Complaint Seriously

The Lawsuit

Your company, a business built through the labor and ingenuity of you and others, has been sued. You probably learned of the lawsuit when you received a Summons and Complaint. The Summons likely states that you must respond to the Complaint within twenty or twenty-three days. The Complaint likely recites various allegations against your company and perhaps other entities. The Complaint may allege that the plaintiff (the person suing your company) has sustained personal injuries; it could allege that your company has breached a contract; it could allege that your company damaged someone else’s property. Whatever the plaintiff is claiming, at the end of the Complaint you will see a request for some sort of relief, likely monetary damages.

Receiving notice of a lawsuit can trigger many emotions such as anxiety, fear, or anger. Receiving this notice should – and for the good of your company must – trigger action.

Contact a Litigation Attorney and your Insurance Company

There are several things you should do after learning that your company has been sued, regardless of whether the allegations in the Complaint are true or completely fabricated. The two most important things are: 1) contact your insurance company; and 2) if there is any chance that the allegations in the lawsuit will not be covered by an insurance policy, contact a lawyer.

If your company has purchased an insurance policy that covers the type of claim made against your company, your insurance company should hire an attorney who will represent your company and defend it. If your company does not have insurance that covers the type of allegations made in the Complaint, you should, as quickly as possible, contact an attorney with experience in litigation.

Other things you should do include taking steps to preserve evidence that has any chance of being relevant or related to the lawsuit. Depending on the nature of the lawsuit, other steps or actions may be appropriate. An attorney will provide more details regarding this process.

Do Not Ignore the Complaint or Try to Represent Your Company

Once a Complaint is on file, ignoring the problem and hoping the dispute will blow over is no longer a viable option. Indiana’s Trial Rules contain strict deadlines for responding to Complaints and dictate the form of a response.[1] Failure to respond timely and in accordance with the Trial Rules can lead to a default judgment and ultimately, a money judgment against your company. [2]This judgment, even if based on facts that you believe are false or incomplete, is enforceable, and it may be too late, even with a lawyer’s assistance, to undo the judgment and successfully argue that the plaintiff’s claims lack merit.

The plaintiff can take a variety of actions to collect a default judgment, including foreclosing on real estate owned by your company and freezing company bank accounts. These actions can obviously disrupt business and cause significant adverse consequences.

Do Not Attempt to Represent Your Company Yourself

Trying to deal with a lawsuit against your company yourself is also not a viable option. Indiana law generally prohibits individuals who are not attorneys from appearing in Court and representing a corporation or limited liability company. [3] The law provides a narrow exception for matters filed in Small Claims Court involving less than $1,500. [4] For other lawsuits, however, attempting to represent your company in court would constitute the unauthorized practice of law.

The main reason for this rule is that the law considers corporations and LLCs to be separate entities from the individuals who own them. By appearing in Court on behalf of the company, you would be representing a different person and acting as if you were a licensed attorney. The Judge will not allow such representation. Therefore, attempting to represent your company yourself or through a non-attorney is almost as bad as ignoring the Complaint, and can lead to a default judgment.

Take the Complaint Seriously

Whoever filed a lawsuit against your company takes the matter seriously. You should too. Contact a litigation attorney right away and protect the company you worked so hard to build.

[1] See, e.g., Indiana Rules of Trial Procedure 6, 8, 9, 10, 11, 12, 13, 14.

[2] See Indiana Rule of Trial Procedure 55; City of Ft. Wayne v. State ex rel. Hoagland, 168 Ind. App. 262, 266, 342 N.E.2d 865, 868 (1976).

[3] See, e.g., Simmons v. Carter, 576 N.E.2d 1278, 1279–80 (Ind. Ct. App. 1991).

[4] See Indiana Small Claims Rule 8.

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