Editor’s Note: Lance Martin is an attorney practicing in the Financial Institutions Section of Ward and Smith, P.A.

Consider this scenario: You are in your office working on an important business matter. Your assistant informs you that a deputy sheriff is in the lobby and would like to see you. Worried, you go outside to meet the deputy. He asks you to confirm your identity. As soon as you do, he hands you a Summons and Complaint. You say: “What is the meaning of this?” He says: “Call a lawyer. Have a nice day.”

As soon as the papers are in your hands, you have been sued. It happens. If you run a business, whatever its size, it is almost inevitable that you will get sued at some point by a customer, competitor, disgruntled former business partner or employee, or other person who thinks your business has done something wrong. What should you do when that day comes?

Mark the Date.

The first thing you should do is note the date on which the deputy sheriff “served” you with the Summons and Complaint. In most cases, you will need to make a formal answer to the Complaint within 30 days after you were served. The service may not actually be as dramatic as having the deputy sheriff in your lobby. When you registered your company with the Secretary of State, you designated someone to serve as your Registered Agent. The Registered Agent receives all official correspondence regarding the entity, including service of lawsuits.

It is the Registered Agent’s responsibility to notify you immediately if your company has been sued. The time within which to respond to the lawsuit begins to run when your Registered Agent is served – not when you receive the papers from your Registered Agent. If you fail to make a timely response, the plaintiff (the person who filed the lawsuit) may ask the Court to make an “entry of default” and, thereafter, to order a default judgment against you. In other words, you lose as a result of having not acted. For that reason, it is imperative that you know the exact date of service and that you respond within the time permitted.

Read the Paper.

The deputy sheriff or process server will give you a Summons and Complaint. The summons will tell you how, when, and where you have to respond to the lawsuit. The Complaint will set forth the claims made against you. The Complaint also may have a variety of documents and other exhibits attached to it. Take your time and read the Summons and Complaint carefully. By doing so, you will glean valuable answers to these questions:

• Who is the plaintiff?
• In what state and county is the lawsuit pending? (In certain circumstances, you may be sued in another state, even if your principal place of business is not in that state.)
• Am I being sued in state court, federal court, or another forum?
• Am I the only defendant or one of many? Am I a third-party defendant? In other words, am I being sued by someone who was sued by someone else?
• Why am I being sued? A Complaint should contain a numbered list of factual allegations. These allegations will provide the facts that form the basis of the plaintiff’s claims.
• What does the plaintiff want? In addition to the factual allegations, the Complaint will contain one or more “claims for relief.” These claims for relief set forth the legal bases for the plaintiff’s claims and the specific remedies sought. The plaintiff may seek monetary damages, injunctive relief (to prevent you from performing certain actions), or some other form of relief.
• Who represents the plaintiff? The Complaint has to be signed. The last page will tell you if the plaintiff is representing himself or herself pro se or is represented by an attorney.

Make Haste.

Just because you have 30 days to respond doesn’t mean you should wait 29 days to engage an attorney. To the contrary, you should not procrastinate but should call an attorney as soon as possible. It takes time to investigate and draft legal responses. Provide the attorney with a copy of the Summons and Complaint. It will help if you have an attorney who already knows and understands your business. He or she can assist you with investigating the validity of the plaintiff’s claims as well as determining claims you can make in response against the plaintiff, known as counterclaims.

That’s Why I Have Insurance.

Don’t assume that you are protected because you have insurance. Although insurance covers many business risks, lawsuits still happen. After you notify your attorney, you or your attorney should notify your insurance agent. It may take time, and perhaps some negotiation, for your insurance company to determine if it will defend the case and hire an attorney to represent you.

Breathe. Relax.

After you read the Complaint, you may be shocked and outraged. You may consider it baseless, libelous, and wholly without merit. That is a natural reaction. Remember, the Complaint has been drafted to put the facts in the light most favorable to the plaintiff.

Whatever you do, do not call the opposing attorney. He or she represents the plaintiff, and may well try to use your statements as evidence against you at a trial. Do not call the plaintiff either. You may believe there is an opportunity to negotiate directly with the plaintiff to resolve the dispute, but emotions can easily flare up and your words may come back to haunt you. If so, then your attorney can advise you on the methods of alternative dispute resolution available to you, and the pros and cons of each.

Substance and Process.

Your attorney will shepherd you through the litigation process. The first step will be to file with the Court a response to the Complaint, which may be a Motion to Dismiss the Complaint, an Answer, or simply a Motion to Extend Time to give you more time to investigate the claims and formulate a response. If you can’t get the lawsuit dismissed, you will begin the discovery phase of the case after you file your Answer. Discovery is the formal process of fact-finding, where you gather all the information you need to defend the lawsuit and the plaintiff gathers all the information he or she needs to support the claims. Specific rules and procedures govern how and what types of information can be discovered. It may be in the form of interrogatories (written questions that require written answers), requests for documents, depositions (testimony given under oath and transcribed by a court reporter), or some other method of getting to the essential facts of the case.

After the parties complete discovery, either or both sides may file dispositive motions with the court. These motions, such as a Motion for Summary Judgment, offer the Court the opportunity to resolve the case short of trial. They are used in situations when the parties agree on the essential, material facts of the case, leaving only legal questions for the Court to decide. If the motions are denied, then the case goes to trial so that the fact-finder, either a jury or the judge, can resolve the factual disputes.

Will It Ever End?

This article provides a simplistic summary of a process that can have more twists and turns than a roller-coaster. Every case is different. Some lawsuits move along smoothly and efficiently. Others get bogged down and seem as if they will never get resolved. Although few cases are litigated all the way to trial, most lawsuits take time to resolve. The time from filing a complaint to trial often is measured in years, especially in complex business matters. Therefore, it is important to resist the temptation to want to “just make it go away,” and resign yourself to the deliberate (some would say painfully slow) process of litigation. If it is any consolation, know that others have been complaining about the system at least since Hamlet lamented “the law’s delay” in his “To be or not to be” soliloquy.

You also should talk to your attorney often and have him or her explain the process to you. Remember, it is your case, not your attorney’s, and the attorney’s job is to help you resolve it in the way that is best for your business.

Ward and Smith, P.A. provides a multi-specialty approach to the representation of technology companies and their officers, directors, employees, and investors. Lance P. Martin is a member of the firm’s Financial Institutions Section. He represents banks and other financial institutions in a range of litigation, transactional, and regulatory matters. He can be reached at lpm@wardandsmith.com.

This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.