What to Do When You Are Sued—Immediate Actions

Even if you follow all the best advice for avoiding lawsuits, eventually you're going to get sued. The actions you take the instant you know about a suit can spell the difference between a quick, inexpensive resolution and a prolonged, expensive one.

Here are the most important things to do when you first learn that you or your company has been sued, as outlined in an Employer Resource Institute® special report:

1. Be Careful of Dates
When you are notified of a suit, don't procrastinate. Read the court documents carefully. The law requires you to file a written response to a lawsuit within a fixed period of time—typically 30 days from the time you've been served with the legal papers. Staying on top of deadlines is important because if you don't file papers on time, a judgment could be entered against you.

2. Hire the Right Attorney
Get your attorney involved right away. Be sure your lawyer has experience with your particular type of case and has worked in the court system in which the case was brought.
When it comes to fees, don't be shy. Ask for an estimate of the range of costs involved. It's often tough for a lawyer to give a precise estimate of the expense of handling a lawsuit because there are so many variables that affect the cost. And, of course, at the beginning, the lawyer doesn't know any of the details that help to determine the validity or strength of the case.
Nevertheless, try to work out a budget with your lawyer. Make sure your attorney agrees to consult you before major expenses are incurred or if the budget needs to be revised.

3. Notify Insurers
Talk with your lawyer about getting your insurance carriers involved. If you have Employment Practices Liability Insurance (EPLI), you will have some coverage. Your policy probably requires immediate notification and may give the insurance company the right to handle the case and settle it. (If the insurance company wants to settle and you want to fight, the insurance company's liability will likely be limited to the amount of its original settlement proposal.)
Unfortunately, general liability policies usually don't cover claims such as sexual harassment and discrimination. But never assume that you aren't covered. Sometimes an insurer may agree to pay your defense costs and reserve the right to deny liability later, depending on what comes out in the lawsuit.

4. Assign Responsibility to One Person
To avoid delays and confusion, appoint one specific person in your company to be the liaison with attorneys, insurers, employees, and others who might be involved in the case. The designated person should monitor the claim to be sure it's being handled in a timely fashion.

5. Caution Employees
Remind employees who may have information about the case not to discuss the claim with anyone but your attorneys and their staff.

6. Organize Information
Prepare a list of people who may have information about the case. Gather and organize copies of pertinent documents so that your lawyer will be able to make a quick review of the case.