In continuing Tuesday’s theme of asking essential legal questions, all business owners should approach their lawyer at the outset and inquire: What are the chances my business will get sued?
The short answer is: Pretty good.
The follow-up is often: Why?
The short answer is: Because.
The long answer: There are various reasons why someone or an entity might sue you or your business. Let’s explore a few reasons and scenarios that could lead to a Summons and Complaint from a claimant’s lawyer or process server.
You’ve Got Competition
There are unscrupulous people out there who, for example, learn of a business performing well because press releases peppered with phrases like “outperformed fourth quarter projections” are circulated and they want a piece of it or to chip away at it. Someone could be looking to make a buck on an unsuspecting small business owner, or it could be a local competitor who doesn’t want you playing in their sandbox.
One good example of a competitor bringing a suit is over bidding wars for talent or clients. If you grab that worker who might be under a noncompete, the other side is lawyering up. If you just go after a competitors clients – even if you do something that is completely legal – the other side is lawyering up.
Your competitors are watching you. Be on the alert for them, too.
You’ve Got Shareholders
I recently received a note from a shareholder who wants to be repaid by my client — a business in which he owns debt — instead of converting his notes. The shareholder had already sent me instructions to convert and is still demanding to be paid. Talk about “having your cake.” A lawsuit is inevitable. Whether a judge will hear it is debatable.
Generally speaking, if owners run their businesses on the up-and-up, it should be the last resort for shareholders to bring lawsuits against their own corporations.
You’ve Got/Had Employees
If an employee feels termination was wrongful, you might get a summons. You have to back yourself up with reasons why someone was let go. Unless someone does something drastic that is unforgivable — like threatening physical harm or destruction of property — you might just have to take notes of bad patterns and drop them over time. This is why performance reviews are installed, so you have evidence about employees’ conduct, work, and ethics.
If you start a business, just assume thou shalt be sued. Let it go. Whether the claimant has a case is another story. If you’ve received a summons and complaint, contact Brinen & Associates to stop or lessen the damage.