If you have ever been in business, you know lawsuits and fraudulent claims are common. Business litigation takes many forms including contract disputes, misrepresentation, IPR (what does this mean?) issues, employment issues, and more. All of these can seriously affect not just the revenue of a business, but its visibility and reputation as well.
Because lawsuits can be time-consuming and costly, your goal is to settle in a way that is advantageous for your business. If your business is being sued you need to know what to do to protect yourself from potential wrongdoing. Read on for more information about business lawsuits and the role of a company’s registered agent.
You’ve been served
In any litigation, the plaintiff (the party filing suit) will have to serve process on the defendant (the party being sued). Service of process is the procedure by which one party gives notice of legal action to another in a Summons and Complaint. The Summons will provide the timeline you have to respond, and the Complaint will state the various allegations. Under service of process, the court has jurisdiction over a business and can order it to pay damages or take other actions.
If you are the business owner you can be served directly. But if you formed an LLC or corporation then the registered agent for those entities will be served instead. A registered agent is an individual or entity designated to receive service of process, government correspondence, and compliance-related documents on behalf of the company being sued. In addition to the Summons and Complaint a subpoena for other documents such as company records, computer files, wage garnishments, and more may be included.
Your response to a lawsuit should be planned carefully. The two most important steps to take are to contact an attorney and your insurance company. Because the law considers LLCs and corporations to be separate entities from the individuals who own them you should never attempt to represent yourself or your company. This would be considered unlawful and can lead to a default judgment.
The first thing you need to do
If you are served with a lawsuit contact your business attorney immediately. They can advise you on your options, craft a strategy to defend your business and determine whether you will be able to win your case, or get the best possible outcome.
The issue of how to handle frivolous lawsuits should be of importance to all business owners. The best thing your company can do is to create a business asset protection plan BEFORE your company is sued. Once a lawsuit is filed it is too late to protect your businesses’ assets. But if your company is sued, our firm, Falcon, Rappaport & Berkman LLP, can assist you in securing experienced and strong litigation counsel. We have been successfully providing proactive business risk management and mitigation strategies to clients for three decades.