So, Your Business Has Been Sued. Now What?

Female Judge sits with her back to camera facing the attorneys and audience in a courtroom

Receiving notice of a lawsuit is stressful, disruptive, and distracting. Even if the claims are without merit, you are required to respond to the lawsuit and follow procedural rules. Here’s the good news: An experienced attorney can guide you through the process and take much of the legal burden off your shoulders – letting you get back to business.

Whether you’re currently facing or anticipating legal action, knowing what to expect can help dispel some of the stress and uncertainty of resolving a business dispute.

How to Respond to a Lawsuit: First Steps

Find an attorney with experience in the area of law related to your case as soon as possible. Answer deadlines are triggered by the date you were served with the lawsuit so do not delay in finding representation.

Business owners or executives facing a lawsuit should seek out a law firm that focuses on business or commercial litigation.

Other common practices areas that involve business owners or executives – in any industry – include:

  • Labor & employment. These types of cases involve wage and hour claims or claims of discrimination or harassment. When seeking an attorney for these matters, be aware that some attorneys strictly represent employees, while others represent the employer’s side. Many business attorneys also have experience defending employers against labor & employment claims – both in civil courts and through government agencies, such as the Employment Opportunity Commission (EEOC) or the Texas Workforce Commission (TWC).
  • Health law. Health law attorneys either represent the patient-side or the provider-side of healthcare. On the provider side, common case types include defense against investigations or audits, peer reviews or credentialing matters, collection-related matters involving third-party payors, and disputes over employment agreements or M&A transactions.
  • OSHA Defense. OSHA defense attorneys challenge OSHA citations, guiding employers through the OSHA reporting process, inspections, and communications with investigators.
  • Probate law. Disputes over a will, estate, trust, inheritance, or the executor’s handling of the estate should be directed to a probate litigation attorney. A probate litigation attorney can also help with disputed guardianships and can defend fiduciaries, such as estate executors.

Hendershot Cowart P.C. handles business and commercial litigation, labor & employment defense (representing employers), healthcare litigation and investigations (representing healthcare providers and professionals), and probate litigation.

When Were You Served?

Beware of critical deadlines! You can give up certain procedural rights – such as motions for dismissal, removal, or change of venue – if you delay or miss a deadline. A failure to timely respond to the lawsuit could result in a default judgment being entered against you.

  • What are procedural rights? Procedural rights are the rules of court designed to ensure fair and consistent application of due process. Examples of procedural rights include filing a motion to dismiss if the claims have “no basis in law or fact” or a motion to challenge jurisdiction. Some of these motions must be asserted within the first few months of being served with the lawsuit.
  • What is default judgment? A default judgment is a court ruling made in favor of one party in a lawsuit because the other party has failed to appear in court or respond to a legal complaint within a specified period of time. The default judgment can include any damages or relief requested by the plaintiff in their complaint. The defendant has essentially forfeited their right to defend themselves by failing to respond.

The answer deadline is triggered as soon as you get served. For a typical case in district court, the Texas Rules of Civil Procedure specifies that you have until the next Monday after the expiration of 20 days to file an answer to a lawsuit. Every stage of the litigation process is carefully scheduled by the court clerk. Once retained, your attorney will create a calendar of deadlines and work with you to execute your defense strategy within that timeline.

Budget and Fee Structures

When it comes to paying an attorney, be aware of the different fee structures available, including paying on retainer or on a contingency basis.

Our law firm works on a retainer-based fee structure. After an initial consultation, your attorney will quote a retainer and describe how the fee structure will work. The amount of the retainer will vary depending on the complexity of the matter and the stage of litigation. Once retained, our attorneys will work with you to design a legal strategy with your objectives, your budget, and your desired outcomes in mind.

Some attorneys – especially personal injury attorneys – work on a contingency basis, meaning you typically don't have to pay any fees upfront. Instead, the attorney's payment is contingent upon the successful outcome of your case.

Be aware of potential conflicts of interest with this arrangement: The contingent attorney’s financial interest in securing a speedy outcome may conflict with your own objectives. For example, they might push for a settlement instead of going to trial, even if you believe a trial would yield a better result.

The Initial Consultation

As soon as possible, your attorney will want to review the petition filed against you. Generally labeled with a cause number and entitled “original petition”, the petition (also known as a “complaint”, if filed in federal court) is the legal document filed by the plaintiff in state or federal court that identifies the parties involved, describes the plaintiff’s side of the story, and outlines the legal claims against you.

During an initial consultation, your attorney will likely discuss:

  • The legal claims against you;
  • Your side of the story;
  • Your goals;
  • Whether you want to file a counterclaim;
  • What to expect from the litigation process; and
  • Timelines and deadlines.

The initial consultation gives your attorney the opportunity to listen and understand your side of the dispute, recommend defense strategies, and review next steps with you.

Preserve Documents & Records!

Once you have been served, you have a duty to preserve evidence that may be relevant to the case. Intentional or reckless destruction of evidence, called “spoliation”, can have adverse consequences to your case, such as sanctions or even dismissal of counterclaims or defenses.

To avoid spoliation issues, take steps to preserve relevant evidence:

  • Halt routine document destruction, such as auto-delete settings on mail or cloud servers;
  • Preserve electronic and physical files;
  • Preserve social media posts;
  • Remind employees not to delete or destroy evidence; and
  • Ensure proper record-keeping practices are in place.

The Litigation Process

As they say, knowing is half the battle. Here is what you should expect from the typical litigation process. Of course, please consult with an attorney for more information specific to your lawsuit.

  • Pre-litigation: This is the stage before a lawsuit is formally filed. During this stage, the parties may engage in negotiations or other alternative dispute resolution methods to try and resolve the dispute before resorting to litigation. Typically, an initial demand letter will be sent prior to filing the lawsuit.
  • Filing the lawsuit: If the dispute cannot be resolved outside of court, the plaintiff (the party initiating the lawsuit) files a complaint (or a “petition” if the dispute is in state court) with the court. The complaint outlines the facts of the dispute, the legal basis for the lawsuit (called “causes of action” or “claims”), and the relief sought. The relief sought can vary depending on the facts of the dispute and the causes of action asserted. Money damages and injunctive relief are common forms of relief requested.
  • Service of process: Once the complaint is filed, the plaintiff must properly serve the defendant (the party being sued) with a copy of the complaint and a summons to appear in court by answering the lawsuit. Consult with an attorney to determine if service has been properly accomplished.
  • Answer and counterclaims: Once served, the defendant then has a specified period of time to file an answer to the complaint, which may include a denial of the claims asserted, affirmative defenses, a request for trial, and counterclaims against the plaintiff. Discuss with your attorney whether there are any procedural rights to assert in any sort of preliminary motion prior to the answer being filed or within the first few months.
  • Discovery: After the initial pleadings are filed, the parties engage in the discovery process, which involves the exchange of information and evidence relevant to the case, including written discovery and oral depositions. Written discovery may be in the form of written questions or a request for documents, which is why the preservation of documents is critical. Failing to comply with the discovery process may trigger discovery motions being filed with the court, such as a motion to compel discovery.
  • Expert witnesses: The lawsuit may include claims which require testimony from an expert witness in a variety of different industries, such as a real estate appraiser, a business valuator, a technical expert, or various professionals.
  • Alternative dispute resolution: Mediation is a common alternate to trial. An independent third party called a mediator will work with the parties to discuss the dispute and try to reach an agreed resolution. Mediation allows the parties to exercise a degree of control over the fate of the lawsuit different from what a judge or jury may do at trial.
  • Pretrial motions: Before trial, the parties may file various motions with the court, such as a motion for summary judgment or a motion to exclude experts. These motions seek to dismiss some or all of the claims and/or evidence based on various legal arguments.
  • Trial: If the case is not resolved through settlement or dismissal, the case proceeds to trial. During the trial, the parties present evidence and arguments to a judge or jury, who ultimately make a decision in the case.
  • Post-trial motions and appeals: After the trial, the parties may file post-trial motions or appeals if they are not satisfied with the outcome or to assert any technical errors which may have come up during the trial.
  • Enforcement: If a judgment is awarded, the prevailing party may need to take steps to enforce the judgment, such as filing a judgment lien, seeking wage garnishment, or a court order to turn over property.

How long does this process take? The duration of a civil trial can vary significantly depending on several factors, such as the complexity of the case, the number of witnesses and exhibits, and the court's schedule. A civil trial can last anywhere from a few months to a year or more.

Don't Wait to Call a Houston Business Litigation Attorney

Hendershot Cowart P.C. is a Houston-based business litigation law firm with decades of experience. Our clients range from small- and midsize businesses to multinational, publicly traded companies. We represent clients throughout the state of Texas.

At Hendershot Cowart P.C., we commonly handle these types of business disputes and more:

To learn how we can help your business overcome a lawsuit, call to schedule a consultation or contact us online today

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