How to Protect Your Small Business When You Get Sued

Well, you hoped that it would never happen, but you already know that it is happening – your small or medium-sized company is being sued. Whether the lawsuit has been filed by an employee, a vendor, client or another company, a lawsuit against your business is likely to cost you money regardless of whether you lose or win. It is normal to feel upset, overwhelmed, and indignant. However, if you intend to keep your company and its reputation intact, it is recommended to handle every step associated with the lawsuit carefully.

Here is how to protect your business if you are being sued.

1. Notify your insurer about the complaint

There is a variety of small business insurance policies that can cover your business when facing a lawsuit. For instance, a general liability insurance policy covers businesses against accusations of defamatory remarks about competitors and third-party injury claims. On the other hand, customer allegations that your business caused them financial loss are often covered by a professional liability insurance policy.

Lawsuits from your workers are covered by either employer’s liability insurance or employment practices liability insurance. If your business is being sued and you believe that your current insurance policies cover the suit, consider notifying the right insurance service provider.

2. Consider all your options and decide how you will proceed and respond to the complaint

Once you receive a lawsuit, you will be issued with a deadline to submit a written response to the complaints. This deadline varies depending on the country or state. Note that your answer must contain your admittance or denial of the plaintiff’s allegations, defense or counterclaim against the plaintiff or other defendants, and whether or not you want an alternative solution.

Before responding to any complaint, it is important to understand some important elements associated with the lawsuit. For instance, you need to understand the nature of the claims filed and their potential liability and exposure to your company.

3. Seek legal advice

One of the most important things you should do after receiving suit papers is to seek legal help. Joseph Fantini, a personal injury lawyer at, believes that you should identify an experienced attorney review the suit papers carefully with him or her.

The attorney can help you check the caption and the service information associated with the lawsuit. That way, you can be sure that the lawsuit paperwork contains the proper identity of your business. If the information is incorrect, you can dismiss it. If the details are correct, proceed to review the allegations, and put a preservation order or litigation hold in place. Note that some lawsuits are complicated and you need legal advice to protect your business and handle the suit seamlessly.

4. Don’t communicate directly with the plaintiff

Generally, anything that you say regarding the lawsuit can be used against you. For this reason, you should not contact the plaintiff unless you have thoroughly reviewed the lawsuit. After the review, all communications with the opposing side should be handled through the defendant’s law firm and the plaintiff’s.

5. Never try to cover anything up

It is recommended to be completely honest with your attorney about all relevant facts. Everything will come out sooner or later, and it is good for your attorney to be prepared for them. Besides, offering wrong information could put your company’s future in jeopardy.

6. Stay focused on your business

Never lose sight of the fact that your company needs you and you have a bottom line to think about. Therefore, put aside all feelings of pride and anger. Though you may think that your company doesn’t do wrong things and find no reason to pay a person. Remember, winning a case can cost something more than settling.

Regardless of the success of any business, company owners run the risk of being sued by clients, other businesses or even a vendor. Lawsuits and litigation can be costly, time-consuming, and stressful. Having the right lawyer to offer legal advice is recommended. Also, taking the right steps towards protecting your business is essential. Implement the tips discussed in this article to protect your business in the event of a lawsuit successfully.

About The Author:

Hassan Mansoor is the Founder and Director at After completing a Masters in Business Administration, he established a small digital marketing agency with the primary focus to help the small business owners to grow their online businesses. Being a small entrepreneur, he has learned from project management and day to day staff management and staff productivity. He’s a regular contributor on and