A disgruntled client, a former employee, an aggrevied vendor ... at some point in your entrepreneurial journey someone is going to threaten to sue, whether they have a good case or not. The good news is that most threats of litigation don’t result in actual lawsuits. The bad news is that some New York business owners shoot themselves in the foot by engaging in self-destructive behaviors when operating under a threat.
Many of these threat-makers are just blowing smoke, but you shouldn’t dismiss them out of hand. As an experienced business law attorney, I've seen entrepreneurs take different actions. Let’s look at some of the things you and your company should and should not do when faced with the threat of a lawsuit:
Don’t return fire! As tempting as it might be, DO NOT fire off an email, text, or letter. DO NOT call them.
Model your behavior on that of President Abraham Lincoln. When he felt like firing off what he called a “hot letter,” Abe would load up his missive with all of the frustration, exasperation, and annoyance he had, then stuff it in a desk drawer until he cooled down. He’d then write: “Never sent. Never signed.” This technique served as a cathartic outlet to allow him to say what he really thought. Another non-sender of hot letters was Mark Twain who believed this provided him with “unallowable frankness and freedom.”
Don’t Talk About it.
While it also might be cathartic to bare your soul to a manager or an employee, don’t discuss the issue with anyone. You don’t want to be lamenting in the break room and allow your thoughts to escape your mouth, like, “You know, maybe I did tell that guy….” No.
Remember that if this escalates to actual litigation, these people may be called as witnesses for the other side.
Don’t Destroy Evidence.
The threat of a lawsuit may bring on a “fight-or-flight” response (also known as the acute stress response). This physiological response is triggered by the release of hormones that prepare your body to either stay and confront the threat or run from the stressful situation.
Part of your instinct to take flight may be to destroy information in an attempt to protect yourself from criticism and exposure. While you may not be guilty of anything, this physiological reaction may make you behave destructively and get rid of stuff.
This isn’t like in the movies where high-ranking officials and their assistants destroy incriminating documents as the enemy storms the gates of their compound. Resist the urge to delete computer files or shred what you think are sensitive documents.
In fact, if this issue moves forward, you may have a duty to preserve documents. The attorney for the other side may issue a “litigation hold” (also called a “preservation order” or a “hold order”). This mandates that a business preserve all data (hard copies or computer files) that may concern a legal action involving the company. A litigation hold prevents spoliation—or the destruction, alteration, or mutilation of evidence. Destroying evidence can have a disastrous effect on your defense.
Take a deep breath and try to relax a little, and remember that the fight-or-flight response can be triggered by both real and imaginary threats. This threat of litigation may be nothing, so don’t overact.
Self-defeating behaviors are more common than many business owners believe. Here are a few more:
- Invulnerability. Illusions of invulnerability can result in overconfidence and recklessness. This may result in blowing off a threat of litigation rather than taking the appropriate amount of concern.
- Procrastination. Of the many behaviors that can jeopardize or destroy the success of a company, procrastination is the most common form of self-defeating behavior. Under the heading of “just blow it off,” don’t let this threat get buried under the paperwork on your desk. Address it and move on.
- Immediate Gratification. With our 24/7 online culture, we can become more impulsive and less disciplined. While Lincoln didn’t have a smartphone, he still exercised discretion and sound discipline in dealing with issues.
Our actions have consequences, and we have to be careful when responding to the threat of litigation. There’s a wide course of action that skirts the extremes of complete meltdown and total apathy. Consider your actions carefully. And think about the long-term health of your business and yourself.
Decide Your Course of Action. Not Sure What to Do?
It's not uncommon for a business owner to struggle with what to do next. If you’ve already researched the situation and still can’t determine whether their legal claims are valid, you should talk to an experienced New York Business Law attorney. Remember that each situation is different, so if a legal issue begins to look real and legitimate, speak with an experienced attorney immediately.
If you are threatened with a lawsuit, it can disrupt your business and your personal life. With so much at stake, you should work with a skilled New York business law attorney.
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Francine E. Love is the Founder & Managing Attorney at LOVE LAW FIRM, PLLC which dedicates its practice to serving entrepreneurs, start-ups and small businesses. The opinions expressed are those of the author. This article is for general information purposes and is not intended to be and should not be taken as legal advice.