Law, Small business

How a Small Business Should Deal with Being Sued

Litigation can be the death knell for a small company, with pricey legal fees playing havoc with your overheads.

That's why it's important to know exactly what steps to take if such an event arises. And, although you should ideally have a plan in place to prevent such issues arising in the first place, there are times when a legal dispute can't be helped.

Whether it's sexual harassment, problems with pay, discrimination or redundancy issues, here are a few steps you'll have to take to operate a cost-effective case.

Consult an Employment Lawyer ASAP

The first port of call is to consult a legal team to find out where you stand in such a case. This must be done with haste, as a claimant will be able to find a judgement in default against you if you don't respond within 14 days to a county or high court claim.

In bringing the case to effective legal representation, you will be able to determine whether to push forward with a defence or settle out of court.

To settle or not to settle

Before we even move into the realms of a lengthy court procedure, it's important to decide whether you'd like to settle or not. In many instances, settling outside of court is a business's best bet, even if the claimant has a fairly weak case.

In the event that you win, you will be unlikely to gain back your costs - and if you lose, you'll probably be forced to pay back most of your claimant's costs, in addition to your own, making settling the least costly option.

Find out if you're in the wrong

A lengthy court case is unlikely to end well for a business if it turns out they were in fact liable all along. It's best to find out as early as possible how much water a claimant's case holds, as well as how much evidence they have to back up such a claim.

Once again, it is advantageous for a business to own up to any wrongdoings as early as possible in order to cut down on legal fees. If you are aware that you are in the wrong, you can:

  1. Agree to pay an amount agreed upon by the courts and the claimants in full.
  2. Agree to pay an amount agreed upon by the courts and the claimant in instalments.
  3. Make a counterclaim.
  4. Negotiate a reasonable offer with the claimant outside of court.

Defend the claim

Ideally, a court case should be the final option when being sued but, if a claimant refuses a reasonable offer, then this is the only next step.

You must make sure that you are standing on solid legal ground when defending a claim against you, finding out every detail of the case and making sure that any possible question can be answered fully and effectively.

A robust defence can be aided by exchanging as much information, documents and evidence with the claimant as possible. This will also cut down the length of your trial, dramatically reducing overheads for both parties.

Make sure this doesn't happen again

As a business, you should really have steps implemented that will stop you from having to be sued at all. And, after a court procedure that's sapped up some of your finances, you should be able to figure out where you went wrong in your treatment of employees. In order to stop being sued again, you should:

  1. Update your employee handbook - tighten guidelines in your employee handbook that may not be clear enough.
  2. Put everything in writing – document conversations and meetings. These can be referred to if another potential dispute arises.
  3. Talk - always be ready to talk about a potential problem at the first possible juncture. Don't allow small issues in the workplace to snowball into a litigious mess.

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