What to Do Immediately After Your Business Is Served With a Lawsuit

Being served with a lawsuit is a critical moment for any business. The steps you take in the first hours and days can materially affect your legal exposure, costs, leverage, and ultimate outcome. Missteps at this stage are difficult, and sometimes impossible, to undo. In this article, we’ll uncover exactly how to avoid costly mistakes through early intervention and legal guidance.

What to Do After Being Served & Why Timing Matters

Business litigation is not just about legal arguments. In reality, it is about strategy, leverage, and risk management. The earliest stages of a lawsuit often determine:

• Whether a case is dismissed early
• How costly discovery becomes
• Whether settlement occurs on favorable terms
• How well the business is protected operationally and financially

For these reasons, immediate and informed action is essential. The following seven steps outline what businesses should do right away after being served with a lawsuit to protect their legal and operational interests.

1. Do Not Ignore the Lawsuit or Delay Action

Service of a civil lawsuit triggers strict legal deadlines under California law. Even if the claims seem exaggerated or unfounded, the lawsuit must be taken seriously from the outset.

Failing to respond on time is one of the biggest mistakes business can make after being served, and can result in:

• Default judgments
• Loss of defenses
• Increased leverage for the opposing party

Read more about the business litigation process.

2. Preserve All Relevant Documents and Communications

Upon being served, immediately instruct key personnel to preserve documents, emails, text messages, contracts, accounting records, and electronic data related to the dispute.

Do not:

• Delete files
• Alter records
• “Clean up” communications

Doing so may qualify as spoliation of evidence, which can lead to court sanctions and severely weaken your defense. Even unintentional actions (deleting emails or overwriting electronic files) can be considered spoliation once a lawsuit is anticipated.

3. Avoid Contact With the Opposing Party

Once a lawsuit has been filed, every communication related to the dispute carries legal risk. This includes communications such as emails, text messages, phone calls, and informal conversations with the opposing party or their representatives.

Direct communication with the opposing party can:

• Be used against you in court
• Undermine legal strategy
• Create admissions or inconsistencies

4. Notify Internal Stakeholders Carefully

Limit internal discussions to those who need to know. Casual internal emails, messages, or informal conversations can later become discoverable evidence and used to challenge credibility or strategy.

If your business has:

• Partners or shareholders
• Insurers
• A board of directors

These parties may need to be notified promptly, but strategically. Work with your attorney to decide who must be informed and what should be communicated to help minimize legal risk.

5. Review Insurance Coverage Immediately

Certain business lawsuits may trigger insurance defense or indemnity obligations, which can significantly reduce out-of-pocket legal expenses and financial exposure. Relevant policies may include:

• General liability policies
• Employment practices liability insurance (EPLI)
• Directors and officers (D&O) coverage

Insurance policies often contain strict notice and cooperation requirements. Late or incomplete notice can jeopardize coverage, limit defense options, or result in a denial altogether. Reviewing coverage early allows your business to preserve potential benefits and coordinate strategy with insurers where appropriate.

6. Do Not Assume the Case Will “Go Away”

Many businesses delay action hoping a dispute will resolve itself or lose momentum. In practice, this approach often leads to:

• Escalated costs as disputes harden and procedural options narrow
• Missed strategic opportunities, including early motions or resolution leverage
• Reduced settlement leverage once the opposing party perceives inaction

Your business can reduce the costs associated with a protracted legal battle by working with an attorney to seek early resolution through methods of alternative dispute resolution.

7. Consult a Business Litigation Attorney Immediately

Early consultation with a litigation attorney allows counsel to:

• Assess legal exposure and available defenses:
  Business litigation attorneys analyze the claims asserted against your business, identify potential defenses, and evaluate worst-case exposure. Without this assessment, businesses often underestimate risk or focus on the wrong issues, leading to misaligned strategy and avoidable liability.
• Evaluate jurisdiction, venue, and procedural posture:
  Where and how a civil lawsuit proceeds can significantly affect cost, timing, and outcome. Early review often reveals opportunities to challenge jurisdiction, transfer venue, or raise procedural objections.
• Identify procedural and strategic opportunities early:
  The initial stages of business litigation present opportunities to narrow claims, seek early dismissal, limit discovery, and position your case for resolution before costs escalate. These opportunities are frequently lost when legal counsel is brought in too late.
• Shape the case before positions harden and narratives solidify:
  Involving your attorney early on can influence how the dispute is framed, preserve credibility, and prevent damaging admissions. However, once pleadings are filed and positions are set, the case loses some of its flexibility and leverage is harder to regain.

Business owners and entities should note that early involvement does not mean immediate escalation. In many cases, it enables measured and controlled decision-making, which allows for strategic negotiation, targeted responses, and early resolution where appropriate. Alternatively, delaying legal counsel often results in reactive litigation, higher costs, missed defenses, and reduced leverage. Early guidance helps ensure that each step taken aligns with your business’s legal, financial, and operational objectives.

---

Key Takeaway

Being served with a lawsuit places your business at a critical decision point. The actions you take early can influence not only the outcome of the case, but also the cost, duration, and impact on your operations and reputation.

Law Advocate Group, LLP advises businesses throughout Los Angeles and Southern California in business litigation and complex civil disputes. A Los Angeles business litigation lawyer at our firm provides a strategic approach focused on risk management, leverage, and long-term business objectives. Early involvement allows counsel to assess exposure, preserve defenses, and develop a litigation strategy aligned with your goals.

---

FAQ