No one expects to get sued, and many business owners don’t have a response plan. The first steps you take after getting served with lawsuit papers are very important. Doing the right thing can ultimately make a difference in the outcome of the lawsuit.
Restaurant owners are exposed to many types of lawsuits — there are employee-related problems such as wage disputes or discrimination cases. Restaurateurs are also subject to suits involving food-related illnesses. There is also the potential for legal trouble when it comes to ensuring the safety and security of patrons.
There are best practices for how to handle a lawsuit and what to do when you are served with papers. Being prepared with a good response plan can help you recover financially and save the reputation of your business. Here are a few tips on how to handle a lawsuit.
Keep a tight lip after you are served with a lawsuit
If you are served with a lawsuit you may be tempted to try to settle it yourself, but this isn’t the time to try to come up with a friendly settlement. This is the time to speak to a lawyer.
Granted, an emotional response is normal after finding out about a lawsuit. You may be angry and confused, but stay calm and don’t confront the plaintiff. If the person is someone you must see on a regular basis, make it clear that you won’t discuss any aspect of the lawsuit with him or her. Remember that anything you say at this point can be used against you in the legal proceeding, so don’t talk to anyone except your lawyer.
Also, preserve your documentation. This includes voicemails, electronic correspondence, photos, or videos. Destroying evidence is a federal crime and will hurt your case.
Get help from your insurance company
If you are named in a lawsuit, contact your insurance company. Your insurance policy may contain coverage that can help you. Some policies pay for legal representation. The insurance company will need time to respond to the claim, so, get them involved as soon as possible for the best outcome.
Here are a few ways insurance may help with a lawsuit:
- Professional liability may extend coverage if a patron claims your professional work caused them some financial harm.
- Employee-related lawsuits may be covered through employment practices liability. In some cases, this coverage is part of your workers’ compensation policy.
Often, policyholders are surprised to learn their insurance responds in the event of a lawsuit. Contact your insurance company right away and get the help of your policy — this is why you secured coverage in the first place.
Respond with haste
As much as we might want them to, a lawsuit will not just go away. The sooner you deal with it, the better. Most lawsuits will have a time frame in which you must respond in writing – typically 30 days.
The catch is that if you don’t respond to the suit as required by the timeframe, the plaintiff will win by default and you will be held liable for damages.
Your attorney will help prepare your response and it will include your acknowledgment or denial of the plaintiff’s allegations, your defense, and any countersuit you may choose to file. The response will also include your request for either a jury trial or a settlement.
Keep an open mind and focus on your business
Lawsuits can cause emotions to run high, especially if you feel as if you haven’t done anything wrong. For the best results, your decision on how to respond to the suit should be made with your lawyer. Keep an open mind and listen to their suggestions. In some cases, it’s better to settle a lawsuit to preserve your business than it is to be right and wage a long, drawn-out legal battle from which you may not recover.
For example, your restaurant may be better off settling a case for $25,000 than it would be spending $35,000 on winning the case. As the saying goes, “A bad settlement is often better than a good trial.” The ultimate goal is to preserve your restaurant, so consider your lawyer’s advice carefully.
Restaurants can recover from lawsuits
In the end, your restaurant can recover from a lawsuit, but your initial response is a critical factor. Remember to stay calm, respond promptly, seek legal advice, and involve your insurance company.
McGowan’s Restaurant Package serves as your legal partner to help guide you through and recover from lawsuits. If you need an insurance partner that will be there if trouble arises, contact McGowan.