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As much as you have tried to avoid it, it now appears the business dispute that’s been keeping you up at night for the past several months is headed for a lawsuit. There are often strong indications that a lawsuit is imminent, such as ceased communication between you and the other party or a complaint filed to an outside agency. But regardless of whether or not a suit has actually been served, there are several proactive steps you should take to help ensure a better outcome for you and your business.

Assess your financial situation. Win or lose, litigation has the ability to drain money from your business’s coffers. While your company hopefully has insurance for litigious situations, you should still prepare a rough estimate of the costs associated with litigation to make sure you are financially prepared. 

Inform your insurance company. After the need for a claim arises, most insurance companies require you to report the claims within a certain period of time. If you are not sure whether your policies will cover costs associated with litigation, you should reach out to your insurance company as soon as possible. On the other hand, don’t just assume that litigation is covered by your current policy. Communicating with your insurance company early can give you certainty about the out-of-pocket costs incurred by a lawsuit. 

Review the original business contract. If your dispute does indeed proceed to court, check the contract to determine if any provisions address litigation. Some contracts mandate that disputing parties go through arbitration. Arbitration differs from litigation in a few key ways. For one, it is a private process that is not subject to the constraints of the legal system. Also, the decision of an arbitrator cannot be appealed. 

Do not communicate with any representatives from the other party. When a lawsuit has been filed, the time for cordial negotiations has ended and your attorney will handle future communications. Any communication that occurs between disputing parties may become evidence in court. This is especially true for written communication; you do not want to create a paper trail that hurts your case. 

Retain an attorney experienced in litigating commercial disputes. The sooner you do this, the better. Once you serve or are served with a lawsuit, there is a time limit for responding. Your chances of prevailing in court will dramatically suffer if you wait until the last minute to confer with your legal team. Also, depending on how the served documents are structured, your attorney might be able to get the suit dismissed. 

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At a certain point, you need to batten down the hatches of your business and hunker down for a lawsuit. Even if you are not 100 percent positive that one is on the immediate horizon, it pays to prepare. Our firm has experience litigating and defending lawsuits for a variety of business clients, and we want to do the same for you. Reach out to us today to get started.