Contractor Checklist: What to Do If You Are Sued

Apr 2, 2017

By Renee Schwerdt

Owning a business can be uniquely rewarding, but rewards do not come without risk. Perhaps the most dreaded of those risks is a lawsuit. While some contractors who get sued keep that worry in the back of their minds, others avoid thinking about legal issues altogether, or worse — they assume it can’t happen to them. But contractor lawsuits do happen. Often. While you can’t guarantee that you won’t be sued, you can prepare yourself by having a plan of action in the event of a lawsuit.

Here are steps contractors could take if they get sued…

▪ Take notes about service of process. Each jurisdiction has rules governing service of process (how you were informed of the lawsuit). Take note on how you were served so that you or your lawyer can determine whether there are grounds to challenge the service.

▪ Do not ignore the complaint. Do not throw the complaint in a drawer and try to forget about it. Failing to respond to a complaint could result in default judgment against you or your company. The sooner you act, the more control you have over the situation.

▪ Review the complaint. Read the complaint to gather some basic information about the suit. Who filed the suit? Is the plaintiff suing your company, you, or both? Why has the plaintiff filed suit? How much money is the plaintiff demanding?

▪ Contact a lawyer. Do not attempt to engage the plaintiff on your own. Contact an attorney experienced in construction law. Your attorney will help you analyze and understand your risks. If the amount in controversy is small, your attorney can advise you on how to best represent yourself. After consulting an attorney, you will be able to make an informed decision about how to proceed with the lawsuit.

▪ Contact your insurance company. If you think that you may have insurance coverage for the plaintiff’s claims, contact your insurance company immediately, since most insurance companies require prompt notification of the claim. Your attorney can also assist you in reviewing your policy and obtaining coverage.

▪ Collect and preserve documents: Collect all documents, photographs, correspondence, etc. (electronic or paper) related to the case so that you can review them with your lawyer. Do not delete or destroy anything. Hiding information from your lawyer can only hurt your case. You could also face severe sanctions from the court for destroying or withholding information during the case.

▪ Be careful who you speak to. Your conversations with your attorney are generally privileged. However, anything you say to a third party could make its way to the other side.

▪ Consider whether you can settle the case right now. The vast majority of lawsuits end in a settlement. Settling the case at an early stage can save a lot of cost and worry.

You can’t guarantee that you won’t ever be sued but you can prepare yourself by having an action plan in the event of a lawsuit.

Note: this article is for informational purposes only and is not intended to serve as a substitute for consultation with a legal professional.

Renee Schwerdt is an attorney and the owner of Plumb & True Legal, a law firm that serves contractors, architects, vendors and others in the construction industry. Her new blog, Level Up, is available here: www.plumbandtruelegal.com/blog.