Mistakes California Business Owners Make When Their Businesses Are Sued

As an entrepreneur, one of the most stressful experiences is when your business is sued. In California, businesses face lawsuits for several reasons, including contractual disputes, employment issues, or other business-related issues. If another individual or company has sued your business, you must be cautious when handling the situation. How you respond can significantly affect the outcome of your case. Unfortunately, many business owners make serious mistakes that can hurt their case. Here are some of the top mistakes California business owners make when their businesses are sued.

Mistake #1: Ignoring the Lawsuit or Missing Deadlines

One of the biggest mistakes you can make after you receive a notice informing you that your business is being sued is ignoring the lawsuit. According to California law, specifically Code of Civil Procedure section 412.20, an individual or business generally has up to 30 days to file a response after being served with a valid complaint. Don’t ignore the complaint even if you believe the complainant does not have a valid case.

If you do not respond within the 30-day deadline, the plaintiff can request a default judgment. If this judgment is granted, the plaintiff will automatically win the case against you, and the court may not consider any arguments you have to present. A default judgment will give the complainant the power to use legal methods to enforce the court order.

Mistake #2: Trying to Represent Your Business in Court

In California, corporations and LLCs cannot represent themselves in court like people can. California law requires legal entities to have a licensed attorney represent them. Unless you are a licensed attorney or you and the business are legally the same (for instance, you run a sole proprietorship), you should not try to represent your business in court. Trying to represent your business can lead to your case being dismissed. And even if you and the business are legally the same, it is highly advisable to retain an experienced California business litigation attorney to protect your business’s interests.

Mistake #3: Ignoring Alternative Dispute Resolution

You might assume that going to court is the only way to resolve the business dispute. This is not true. There are alternatives that can help you save time and money and reduce the stress that comes with court cases. Common alternative dispute resolution (ADR) methods that can help resolve business disputes include;

• Negotiation
• Mediation
• Arbitration

The most appropriate method depends on the nature of the dispute and the desired outcome.

However, it’s vital to note that, depending on the specifics of your case, ADR may not be the best option for resolving the dispute. A skilled attorney can evaluate your case and advise you accordingly.

Mistake #4: Destroying or Hiding Evidence

Not only can deleting emails, shredding documents, or failing to preserve relevant records harm your defense, but it can also lead to serious penalties, including monetary fines and even a default judgment. After finding out your business has been sued, work with an attorney to come up with a strong defense instead of hiding or destroying evidence.

Contact Us for Legal Help

Contact our skilled business litigation attorneys at SAC Attorneys LLP for professional help if your business is facing a lawsuit.