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The nine things to stop doing the day you are served.

Most of the damage in a business lawsuit is self-inflicted, in the first two weeks, before anybody hires a lawyer. Almost all of it is avoidable by not doing things.

Being sued produces an urge to act. Explain, correct, protect, fix. Nearly every instinct on that list makes the case worse. Here is the list of what to stop.

  1. Stop calling the plaintiff. The conversation where you sort this out between adults does not exist any more. There is a case now. Every word you say is a statement by a party, and it is admissible.
  2. Stop putting the facts in writing. Texts, emails, WhatsApp, a message to a mutual contact explaining your side. All of it is discoverable. Owners regularly talk themselves into admissions in week one that counsel then spends a year working around.
  3. Stop deleting anything. The moment litigation is reasonably anticipated you have a duty to preserve. Turn off auto-delete, tell your people in writing, and leave the records alone. A deletion that was innocent looks exactly like a deletion that was not.
  4. Stop moving money. Transfers out of the company, distributions to yourself, paying down a related-party loan, shifting assets to another entity. Nothing hands a plaintiff an injunction faster, and nothing is easier to characterize badly.
  5. Stop the self-help. Changing the locks, cutting off a partner’s email, removing his access to the accounting system, taking his name off the bank account. It converts a defensible dispute into an easy order against you.
  6. Stop posting. Anything public about the dispute, the plaintiff, or how well the business is doing. It gets printed and attached to something.
  7. Stop tidying the documents. Do not backdate, reconstruct, “clean up,” or helpfully annotate anything. A weak document is survivable. An altered one is not.
  8. Stop assuming you have more time than you do. In New York the time to respond generally runs from service: twenty days if you were handed the papers personally in the state, thirty days if you were served any other way, with the start date turning on when service was legally complete. Miss it and the plaintiff can take a default judgment — everything he asked for, without proving any of it.
  9. Stop getting your legal advice from a chatbot. It does not know your facts, it has not read the complaint, it cannot tell you which of these claims is already time-barred, and it will answer with total confidence either way.

In the first week the defendant who does nothing beats the defendant who does something, every single time.

The short list of what to actually do

  • Keep operating the business in the ordinary course.
  • Preserve every record, untouched.
  • Write your own timeline of what happened, while it is fresh, and give it to your lawyer rather than to anyone else.
  • Find the response deadline and the return date on anything marked as an order to show cause.
  • Engage counsel, and route everything through them from that point forward.

You cannot win the case in the first week. You can absolutely lose it.

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Joe Prencipe, Managing Partner of Prencipe International
Written by
Joe Prencipe
Managing Partner, Prencipe International

Before founding Prencipe International, Joe practiced at the top law firms in the world, including Freshfields Bruckhaus Deringer, Baker McKenzie, Morgan Lewis & Bockius, and served at the U.S. Securities and Exchange Commission. He has spent his career on high-stakes disputes and transactions for businesses that cannot afford to lose. When a New York business owner gets sued, he answers the same day and is on the docket within the week.

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