I Have Been Served with a Lawsuit – What do I do Now?
The Definitive Steps You Should Take
Being served with a lawsuit is a jarring experience, especially if you have not been involved in litigation before. Maybe you were expecting the lawsuit, maybe you were not, but in either case, the experience can be very intimidating and make you feel as though you are on your heels i.e., on the defensive before the lawsuit even gets going. When you have been served with a lawsuit, there are definitive steps that you can and should take right away to even the playing field quickly and protect your rights.
- What do I do first?
First and foremost, read through the lawsuit, take note of important dates throughout the paperwork, and we recommend you find legal counsel that specializes in the area of law the case is regarding as soon as possible. Whatever you do… do not ignore the lawsuit, put it under a stack of papers, or think it can be resolved in other ways (especially without the advice of an attorney). You must act expeditiously!
Once you are served, the clock starts ticking on certain deadlines. The first deadline is the date by which you must file an answer to the complaint. A response from you will be due usually either 20 days from the date you were served (for in-state service) or 30 days from the date you were served (for out-of-state service). If you do not file an answer to the complaint on time, then whomever filed the lawsuit (the plaintiff) will likely ask the court to enter a default judgment against you. When you don’t respond to a party’s allegations, your failure to do so is treated by the court as an admission that the allegations are true. If a default judgment is entered against you for money, then the plaintiff can begin to collect immediately, including by having writs of garnishment served on your employer, your company, and/or your bank accounts. In short, once you have been served, ignoring the lawsuit or putting off dealing with it is about the worst thing you could do.
- Do I need to consult with an attorney?
Yes, and the sooner, the better! An experienced attorney will be able to read the complaint, quickly determine the most relevant issues in the case, and ask you the right questions to ascertain the strengths and weaknesses of your position in the suit. Your counsel will need lead time to review your file and be in a knowledgeable enough position to respond in court to the complaint. If you wait too long to contact an attorney, you may find that their schedule is very crowded, and they can’t help you before the initial response (answer) is due.
In looking for legal representation, also make sure that you are only contacting attorneys who practice in the area of law that the case concerns. For example, if the lawsuit is about a business dispute, a disagreement between business partners, or a breach of contract, then it would not serve you well to consult with or hire a lawyer specializing in personal injury or tax law. This may seem academic, but sometimes a law firm’s website will list many practice areas, making it difficult to determine their true focus and areas of strength. When you set up the consultation, simply make sure that you are in the right place by explaining a little bit about the lawsuit and legal issues involved.
- How do I best prepare for my consultation with an attorney?
The most important thing you can do to have an effective consultation with an attorney is to prepare in advance – whether it is going to occur on the telephone, in person, or by Zoom. When you speak to the lawyer, he/she is going to ask you several questions –for instance, about contracts that may be relevant to your case, important emails or texts that may have been communicated between the parties, and questions concerning the evidence (e.g., photographs, land surveys) that you may have to support your case. Have these things available and in front of you literally right when you have your call with the prospective lawyer, so that you can refer to these items quickly during your consult. If you have the lawyer’s email address before your discussion, you may want to send copies of what you believe are the most important documents, emails, contracts, and texts to your case before your scheduled conversation so the attorney can follow along in the documents with you during your consult. You do not want to send the attorney the entire file at one time, or even too many materials in each email, because this can be overwhelming and diminish what can be accomplished during the consultation. Your goal should be to focus the lawyer as quickly as possible on the most important facts and evidence.
- What happens after I have hired the attorney?
First, the attorney will evaluate whether a motion to dismiss the case (or other motion to the court) is appropriate. If your case arises out of or relates to a contract of some sort, then there may well be provisions contained in the contract that limit the ways in which disputes between the parties can be resolved.
The majority of business contracts that we see in our practice today, for example, contain what are referred to as “dispute resolution” clauses. These often provide that in the event of a dispute between the parties arising out of the contract, the disagreement must be resolved by mediation; and if that fails, then by arbitration. In the arbitration process, an attorney acts as the judge, holds a hearing at which witnesses and evidence are introduced, and then decides who wins and who loses the case. The parties are not free to take the case to a traditional court and have it decided by a judge. If the contract at issue in the lawsuit with which you have been served contains such a provision, then your attorney will likely recommend that you take action to stop the lawsuit and ask the court for an order directing the parties to engage in the mediation and/or arbitration process instead.
Assuming that the case does not belong in mediation or arbitration, the attorney will return to determining whether to file an answer to the complaint or perhaps a motion to dismiss. Oftentimes, complaints contain legal deficiencies – defects – that should prevent the case from moving forward. One example of this would be the court may not have jurisdiction over you because you reside in another state and have not done business with residents or companies located in Arizona. Indeed, the court may not have jurisdiction over the subject matter of your case at all, or the case may have been filed in the wrong court. (Only a limited category of cases filed in federal court are actually properly filed there.) If these types of jurisdictional or venue issues are present in your case, then your attorney will likely suggest that you file a motion to dismiss the case, or at least file a motion to have the case transferred to the proper court.
Aside from jurisdiction and venue issues, your counsel will also evaluate whether there are deficiencies in the way in which the claims are alleged in the complaint. In order for a claim to be viable, the complaint must contain certain specific allegations. A claim for fraud, for example, is required to contain nine (9) specific allegations and supporting factual detail. A claim for breach of contract must contain proper allegations of damages arising from the breach. A claim to remove a lien from a property, or a claim to “quiet title”, must allege specific elements also. If these are not contained in the complaint – something that would be obvious to an experienced lawyer – then your attorney will likely advise that a motion be filed to dismiss the case.
If it is not clear from the face of the complaint that certain allegations are missing, or that the claims are legally deficient, then your attorney will file an answer to the complaint instead of a motion to dismiss. In an answer, your counsel responds paragraph by paragraph to the allegations of the complaint, admitting and denying the assertions as appropriate. The answer will also state what are referred to as “affirmative defenses.” For instance, if you have been sued for breach of contract, one type of affirmative defense is that the contract on which the lawsuit is based is illegal. Courts will not enforce illegal contracts. If the plaintiff in your case is seeking a temporary restraining order or injunction against you or your company, another type of affirmative defense that may be available is that the plaintiff has come to the court with “unclean hands.” This defense is based on the maxim that “he who comes into equity must come with clean hands.” Translated, this means that if you are going to ask the court to exercise its equitable powers to do justice for you, then you must not have engaged in inequitable conduct yourself.
- Do I get to assert claims against the other side, and if so, when?
Yes, you do. When your attorney files an answer to the complaint, he or she can also file counterclaims on your behalf. Some types of counterclaims are “compulsory”, or mandatory, meaning that if you do not assert them, then you will lose them and not be able to bring them in the future. Other types of counterclaims are referred to as “permissive”, which means that you can choose to assert them if you wish, but if you do not, you may still be able to bring those claims at a later time. If you have what you believe are viable claims against the party who sued you, experienced counsel will be able to tell you whether they fall into the category or compulsory or permissive. Generally, a compulsory counterclaim arises out of the same set of transactions or occurrences that are the subject matter of the opposing party’s claims, provided that your counterclaim does not require that another person be joined in the lawsuit over whom the court is unable to acquire jurisdiction.
- Is there a way to resolve the case quickly and without much litigation?
There is, and the process is called mediation. Mediation is a voluntary process in which a neutral party tries to facilitate a compromise or settlement between the parties. The mediator does not decide who wins and who loses, but rather, only acts as a facilitator trying to bring the parties to agreement. Whether mediation will be available early in the process in your particular case will depend in large part on the parties’ attitudes. If one party or the other is determined to get its proverbial “pound of flesh” before the case concludes, or is acting unreasonably, then it is less likely that the parties will agree to participate in early mediation. Mediation can be an especially useful process where either:
(a) you are concerned about publicity or your personal information being made public for all to see, or
(b) you would like to try to salvage the personal or business relationship at issue in the suit.
Mediation is a confidential process, whereas litigation, on the other hand, is a public proceeding. Unless there is a good reason why a case or courtroom should be sealed, virtually anyone can attend hearings in your case, read the court orders that are entered in it, and follow any other activity that is occurring. Litigation can also burn bridges. No matter how well-intentioned one or more of the parties to a dispute may be – we often hear the refrain “I just want to get my fair share!” – litigation often turns hostile and becomes a “win at all costs” game.
- What will happen if the case against me is not dismissed or successfully mediated?
Once the initial phase of the case is completed, or what is sometimes referred to as the “pleading” stage, it moves into the “discovery stage.” Discovery is when parties use various techniques to obtain the information and evidence they need to effectively pursue, defend against, or ultimately settle the case. There are generally three main sources from which information is obtained:
(a) you and those within your control (e.g., accountants, company staff);
(b) the other parties to the lawsuit; and
(c) persons or companies who are not parties to the lawsuit but whom or which possess relevant information.
The tools that are used to obtain information from other parties in the lawsuit include:
- Requests for Production of Documents. These are formal written requests that are sent to other parties in the lawsuit asking them to produce within a specified amount of time a list of documents or other things (both hard copy and electronic), that are in their possession, custody, or control that the other party/parties believes are relevant to the case.
- Interrogatories. These are written questions sent to other parties in the lawsuit that they must provide written answers for within a specified amount of time.
- Requests for Admissions. These are formal written requests that are sent to another party in the lawsuit asking them to admit specific facts that you believe are relevant to your claims or defenses.
- Depositions. Usually held in a lawyer’s conference room, these are opportunities for the respective counselors to ask questions of parties or witnesses orally and under oath. A verbatim transcript of the proceedings is created by a court reporter for use by the attorneys later on, perhaps at a hearing in the case or at trial.
The tools that are used to obtain information from third parties include subpoenas and depositions. A subpoena is a court order that requires a witness or company to produce within a specified amount of time a list of documents and other things, both hard copy and electronic, that are in their possession, custody, or control that you believe are relevant to present or defend against the case. Subpoenas accomplish the same thing, as do “Requests for Production of Documents” that are sent to other parties in the lawsuit. A subpoena can require either or both the production of documents and/or a witness’s appearance at a deposition.
- What is all this going to cost me?
Lawyers’ fees for litigation will vary depending upon several factors, including the size and complexity of your case, the number of witnesses involved, the prospects for an early settlement, and the personality of the party and attorney on the other side. Generally, there are three types of attorneys’ fees structures:
(a) an hourly fee arrangement;
(b) a fixed fee arrangement; and
(c) a contingency fee arrangement.
In addition to attorneys’ fees, and irrespective of the fee structure, you are also responsible for the out-of-pocket expenses for fees related to filing motions with the court, service of process, depositions, online legal research, and other similar items.
Under an hourly billing arrangement, you make a deposit into an advance deposit account. Say, for example, the deposit is $5,000. The firm then bills the fees and costs incurred in your case against the balance in that account until it is nearly depleted, at which point the account needs to be replenished with another deposit that brings your account balance back up to $5,000. This process continues throughout the case until the lawsuit is concluded by settlement or judgment. The amount billed against the advance deposit account is calculated by multiplying the attorney’s or paralegal’s normal hourly rate by the amount of time spent by each of them while working on tasks related to your legal case.
With a fixed fee arrangement, you pay the firm a flat fee to perform certain and specific identified tasks. Regardless of the actual time spent by the lawyers working on those tasks, you will only be charged the agreed upon fee; in other words, the attorney fees are capped. In return for the firm capping its attorneys’ fees for said tasks, the entire amount is paid upfront and is effectively non-refundable. (We say “effectively” because you are always free to fire the law firm, and in that event may be entitled to a refund of a portion of the fee paid based on the value of the representation that has been provided to you up to that point.
A contingency fee is an arrangement whereby the attorney is paid based solely on whether you obtain and collect on a settlement or judgment in your favor. The fee is calculated as a percentage of the amount collected. These arrangements are most typically used in personal injury cases, where an insurance company is paying the settlement or judgment and there is very little risk that the amount due to you will be difficult to collect. This arrangement can be used in other types of cases also, but typically only if the amount at issue is fairly significant and there will be little work required to collect upon the judgment.
- What are the chances my case goes all the way to a trial?
Different attorneys may give you different answers to this question, but in our experience, roughly 80% of our cases settle before trial. The remaining 20% will move on to a trial or arbitration hearing. Because of COVID-19, virtually all trials and evidentiary hearings today are being conducted digitally using Zoom or a similar platform. Most (if not all) cases today are tried to the court — i.e., the judge. Jury trials are for the most part nonexistent at this time. If one or both parties to a lawsuit insist on a jury – which they have a constitutional right to do – then in the instance of the state of Arizona, the trial is not likely to occur until sometime in 2022 (other states might be different).
About Weinberger Law
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