Receiving the threat of a lawsuit is one of the most stressful things a business owner can face. Is the threat legitimate? Should you be concerned? What should you do to safeguard your company?
Handling the situation with care and strategic planning can help to protect your business. Here are some steps to consider when faced with such threats.
Identify valid threats
Not all threats of litigation are serious. Evaluate its credibility by considering the nature of the complaint and the potential legal grounds. For instance, a customer upset over a minor issue is less likely to follow through compared to someone who has suffered a significant injury on your premises.
Gather and preserve evidence
Prepare for the possibility of business litigation by collecting relevant documents and evidence. Examples can include contracts, emails and any other communication with the complainant. Taking this step can aid in the defense of your interests if they follow through on the threat.
Review insurance policies
Check your business liability insurance to see if it covers the type of claim the other party made. Reporting the threat to your insurer promptly can help manage potential financial impacts and provide additional resources for your defense.
Consider settlement options
It might be wise to settle the claim quickly if the threat appears legitimate. Alternative dispute resolution, like business mediation, can be less costly and time-consuming than litigation. A legal representative can help you make this vital decision, and guide you through the process.
They can also fill other critical roles, such as explaining your legal options under Michigan law, creating an effective courtroom strategy and presenting compelling evidence on your behalf.