Litigation preparedness vital for all businesses

by Melissa Wilson

SBJ Staff

Many business owners, large and small, know that a lawsuit can cripple a company's reputation and revenue for years to come. What some don't know, however, are the methods of preparing their company for a rainy day especially a rainy day when a customer takes a spill down a flight of slippery stairs.

"The first thing to do as an individual or as a business is to check with your insurance broker and make sure you have sufficient insurance coverage in case a lawsuit is filed against your company," said attorney Jim Condry, a partner in the firm of Hall Ansley Rodgers & Condry.

"The business owner needs to make sure their insurance broker understands all the facts surrounding the business, such as what type of business it is and what type of environment the business is in so the broker can make an informed decision about what types of coverage to recommend," he added.

Condry said if a company has an inkling that a lawsuit is in the works, alternative dispute resolution may be a solution.

"If a company knows there may be some sort of a claim waiting to be filed against it, there's a fairly new alternative to litigation: ADR, or alternative dispute resolution. ADR can save a company a lot of time and a lot of money," Condry said.

"Of course, if I was a business owner and thought a claim may be filed against my company, the first thing I'd do is contact my attorney and see if he or she can negotiate a resolution to the claim," Condry added.

Condry said ADR offers mediation and arbitration and can be useful in arranging an agreement between parties without the time and expense of a lawsuit, particularly in personal injury, employment discrimination and contract supplier cases.

If a company has not been given advance warning of litigation and the claim has been entered, Condry said phone calls to the company's attorney and insurance carrier should immediately follow service of process.

"If there's coverage for whatever the suit involves, the insurance carrier will provide the defense," Condry said. "The business's own attorney may work with the attorney provided by the insurance carrier, who by contract through the insurance policy, has the right to direct the defense.

"If there are claims against the business for which there is no coverage, for instance punitive damages, the business's own attorney would be involved in that vein of the defense," Condry added.

Once a lawsuit is filed against a business and the owner has been served, the owner has 30 days to file an answer. Condry said if a written answer is not filed by the defendant admitting or denying the allegations in the plaintiff's petition within that time frame, a default judgment could be entered by the judge.

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