Friday, 18 July 2014

We’ve Been Sued! A Litigation Guide for Small And Growing Companies During The First 30 Days

The Clock Is Ticking
So it’s happened, you have been served with a complaint, and now you have a lawsuit to defend. Whether this is the long awaited culmination of a drawn out business dispute, or a nasty surprise the company didn’t see coming, the clock is ticking.  Courts take a no nonsense approach with deadlines, and missing one can have dire consequences.

Failing to file a responsive pleading can lead to an entry of default and eventual default judgment being entered against the company.  Which means that you lost the case, or at minimum will have to pay the additional legal expenses of fighting for relief from the judgment, just to get back to square one.

In California, for most claims you generally have 30 days from the time you were served the complaint to file a responsive pleading. Cal. Civ. Proc. Code §412.20. If you’ve been sued in Federal court, you may have as little as 21 days. Fed. Rule Civ. Proc. 12(a)(1).  There are exceptions to these rules, for instance, unlawful detainer claims require a response in only 5 days!  Cal. Civ. Proc. Code 1167, 1167.3.

This is not an exorbitant amount of time considering that during this time the complaint will need to travel through corporate channels, an attorney will have to be hired (if you don’t currently have a litigation attorney you may need to interview several), money will have to be accumulated to pay the attorney’s retainer, corporate documents relevant to the complaint may need to be located and reviewed, and lastly, your attorney will need enough time to prepare the proper responsive pleadings.

Depending on the complexity of the complaint, your attorney may need several days to prepare a responsive pleading. (I’ll discuss the most common responsive pleadings in a future post). Some pleadings like a simple answer may not require extensive research by the attorney and can be completed in several hours.  Others like a demurrer, also known as a motion to dismiss in Federal court, may take several days, and or may need to be filed with additional pleadings like a motion to strike.  These types of responsive pleadings can require a significant amount of legal research and time to draft properly.
In short, the company should start building its defense team and working on its defense strategy within a few days of being served, and in cases where litigation is expected, the company should discuss the case with an attorney even prior to being served.

No comments:

Post a Comment