5 Things You Should Never Do If You're Sued

Being sued can take down your business and take away your livelihood. Be prepared for the worst by knowing what to do if it happens to you.
Journalist, freelance writer
April 08, 2014

Root canal. Head lice. Breaking down during a rush hour traffic jam without a cell phone. All unpleasant scenarios, but chances are, most people would rather suffer through all of them, even all at once—rather than be sued.

Sean McComber, who has his own financial advising practice at Key Financial Group in Frederick, Maryland, experienced a legal nightmare three and a half years ago, but remembers it like it was yesterday.

"I was leaving the parking lot of a local shopping center, turning left from the aisles of parking spaces and onto the access road running along the front of the shopping center," he says. "It was one of those rainy winter nights where the darkness feels extra dark and thick, and as my headlights swept to the left through the turn, a lady stepped off the curb right in front of my car."

He jumped out and found her dazed but apparently unhurt. "She called her fiancé, and she told me I could go on my way as he was going to come pick her up," McComber says. "Eighteen months later, just inside the statute of limitations, I was served with papers suing me for half a million dollars."

McComber had just gone into business for himself, previously owning a mortgage company with a business partner. The thought of having to pay out half a million dollars was unnerving, to say the least. But as it turned out, McComber was well insured, enough that his auto insurer hired an attorney, and after a $60,000 settlement was reached 13 months later, he hadn't lost anything but time.

But not every entrepreneur is so lucky. Keeping that in mind, here are five things you definitely should not do, if you are ever sued.

1. Never admit you're at fault. "No matter what the circumstances," says Hunter Hoffmann, head of U.S. communications at Hiscox USA, a small-business insurer headquartered in New York.

If you have mixed feelings about who is at fault, share them with your attorney but don't say anything to the person suing you—or his or her attorney. At least not right away. After all, you might feel at fault, but not feel like you need to pay an extra million for your employee, customer or supplier's emotional stress. Or you might actually only be partially at fault, but by stating you were at fault wind up taking all responsibility in court.

"You're paying your lawyers to represent you, and there's nothing to be gained by making their job harder," Hoffmann says.

2. Never throw away documentation relating to your case. Of course, that sounds like a no-brainer. Why would anyone do that? And you wouldn't, willingly—but you might purge your desk of paperwork one day and not realize what you're doing. You might empty out files from your smartphone or PC and not realize what you're throwing out.

"He who has the most documentation usually wins the case," says John Wilder, a marriage coach in Midway, Georgia, who spent 15 years as a home contractor and was sued a few times—and who has sued a few times as well—and won most of his cases.

Wilder says if you take photos of everything you can, keep every record pertaining to your case and even print out articles relating to your issue—that sort of preparation will keep you from losing your case. But you can't win if you lose or toss out pertinent information.

"You hand a judge a file, backing up everything you're saying, and 99 out of 100 times, he's going to side with you," Wilder says.

3. Don't agree to pay money—and expect you'll be reimbursed later. As crazy as it sounds, Hoffmann says he has seen this happen. In one case, a road contractor who was threatened with a lawsuit for doing a bad repair job "admitted fault and then paid for repairs on the road before contacting us, negating his company's coverage," Hoffman says. "By doing this and paving over the road, there was no way for us as the insurer to know if they were actually at fault, what the extent of the damage was and how much the repairs should have costs. These are all areas where insurance can help you, but not if you don’t contact them first."

4. Don't assume you have to go to court. Attorneys will almost always try to settle before going to court, and they will tell you not to call whoever is suing you. But Richard Laermer, CEO of RLM PR, a public relations firm in New York City with 14 employees, says he has been sued several times, and he has often managed to win or settle first on his own by calling the aggrieved party.

"Every single time, I've swallowed my pride and called up the person, it hasn't gone any further," Laermer says. "And, by the way, I have a lot of pride."

He agrees that it isn't smart to admit that you're at fault, but that most people should be able to call and work things out without admitting any blame. He says he'll often suggest to the other, "Let's negotiate this down to where we both lose—because in every good negotiation, nobody really wins."

5. If you do wind up in court, don't be emotional. "You can't ever bring emotion into the courtroom," Laermer says. "You have to pretend you're, like, two engineers."

Wilder agrees. "You have to remain deadly calm and speak in very matter-of-fact tones," he says, referring to the TV show Dragnet and the character's no-nonsense Joe Friday. "The judge doesn't want to hear emotion. If you get emotional, it's going to go against you every time. People go into the courtroom, furious, and they can't wait to stick it to the other guy. But the judge has to hear this every day. He gets a headache."

And if you go to court, you will get a headache, too, which is why Laermer says it's definitely in your best interest to avoid it. In fact, if there's a sixth piece of advice on what not to do when sued, it probably should be to avoid court in the first place.

Laermer says that "lawyers are great for threatening people, and I've gotten a lot done with a good legal letter to somebody who owes me money, but when two people are fighting, if they can't work it out and have to go to court, that's the chump method. The court system is all about paying lawyers."

Plus, it's simply a very stressful experience, far worse than any root canal. "Who the hell wants to go to court?" Laermer wonders. "It's been the worst experience in my adult life."

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Journalist, freelance writer