Don’t panic. I’m not sure there are many situations where falling into a panic is useful. But, it’s definitely not helpful if you think you’ll be sued. Keep a level head. You’ll get through this.
Don’t be an Enron. In the days leading to the collapse of the energy and commodities behemoth Enron, the company and its accounting firm, Arthur Anderson, went on a shredding spree destroying thousands of documents, emails and electronic data. Arthur Anderson, the fifth largest accounting firm in the world, was convicted of obstruction of justice and 85,000 employees lost their jobs. Numerous Enron executives went to jail, Enron went into bankruptcy and shareholders filed a $40-billion lawsuit against the company and its executives.
In Colorado, if a party destroys evidence they should know relates to an imminent or reasonably foreseeable civil lawsuit, the court can enter an adverse inference against that party. That means the jury will be instructed that the evidence was destroyed and that the evidence would have been unfavorable to the party that destroyed it. The court can impose other sanctions including attorney’s fees. These are significant penalties. Every relevant and related document, email and all electronic data should be preserved with a litigation hold to make sure they are not altered or destroyed.
Review your insurance policies. Depending on the insurance, there can be coverage for certain claims made against you or your business. I’ve been surprised at some claims that some insurance policies have covered. If there’s an ambiguity in the policy, the ambiguity is construed against the insurer and in favor of providing coverage. It’s important that your policies are reviewed at the first sign of a possible lawsuit and the insurer is notified immediately. If you wait, there could be a waiver of coverage for failing to timely notify the insurer. If you are in doubt, make a claim with your insurer.
Be careful what you put in writing. In my first job out of law school, I had a case with a lawyer notorious for his obnoxiousness and vitriol. After one particularly contentious encounter, I drafted a scathing letter to this lawyer. Impressed with my sarcasm and wit, I showed it to the 78-year-old senior partner in my firm. He told me not to send it. He said that he learned long ago to put nothing in writing he wasn’t comfortable publishing on the front page of the newspaper. I didn’t send the letter. If you need to put something in writing, stick to the facts and skip the vitriol. If not, your sarcastic email dripping with contempt will not be received well by a jury when you’re being cross-examined a year later.
Consult a litigation lawyer as soon as possible. When you’re served with a complaint in Colorado, you have 21-days to respond. You don’t want to scramble to find a lawyer while the clock is ticking. It’s important to have the time to work with your lawyer to review everything, formulate a strategy and consider defenses and possible counter-claims. If you have a viable claim against the other party, you might want to file a lawsuit first to gain the momentum and be the plaintiff with the first shot at framing the issues to the court. Lawsuits are as much about the facts and the story as they are about momentum. Bringing a litigation lawyer on early in the process assures that you can vigorously push your case forward to maximize the chance for a successful resolution.