Legally Screwed: 7 Ways Entrepreneurs Should Handle a Lawsuit

A lawsuit can make you feel like the world is set against you, but welcome to the big leagues — you’ve been noticed.

It was January 26, 2012 and I was having a great morning. That is until I was abruptly confronted by a joint lawsuit filed by Facebook and the Washington Attorney General. Before learning the details of the suit, they hosted an elaborate press conference that was all over the news. My initial reaction could be likened to the fight or flight adrenaline rush of being cornered by a blood-thirsty predator as I stood at the cliff’s edge. I did not sleep that night. Or the next.

My initial reaction could be likened to the fight or flight adrenaline rush of being cornered by a blood-thirsty predator as I stood at the cliff’s edge. I did not sleep that night. Or the next.

This was my first business lawsuit, and the gravity of the suit (and its consequences) left me nearly paralyzed. I knew none of the allegations were true, but I didn’t know what was going to happen next.

The coming months became an insane roller coaster as I teetered between stress, anxiety and fear over rising legal costs and the sheer uncertainty of it all. I simply did not understand how it all worked. Fortunately, by May 2012 we wrapped up both lawsuits with very favorable outcomes. The Attorney General withdrew two-thirds of their claims after we threatened to dismiss the complaint, and the settlement shortly thereafter only served to cover their attorney fees and reinforce compliance steps we had taken long before the lawsuit began.

Although it felt crazy at the time, I made it through my first lawsuit alive. Most importantly, we came back stronger than ever. We live in a litigious society. And if you own a business, the odds of dealing with the legal system, in some form or another, substantially increase. So, if you’re up against a lawsuit, here are a few tips that will hopefully make life easier:


Get a competent lawyer––now!

If you don’t already have an attorney on retainer, this is an immediate priority. Do not do anything before you hire a business lawyer. And most importantly, do not compromise on the lawyer you choose. An experienced business lawyer will greatly impact the outcome of a suit. In my opinion, you can always find the best lawyers from referrals.


Go crazy, but not too crazy

Give yourself a few days to feel everything you have to feel. It’s going to feel like a punch in the stomach–at best–and like the world is ending, at worst. But the only way out is through. By dealing with your fear and emotions upfront, you will be able to remain productive and continue to manage your company while dealing with the lawsuit.


Turn to your support system

Stay balanced by turning to your support system of peers, friends and family. They are the one’s who will be able to help you get through the mental challenges associated with being sued. To know that you have the support of your loved ones and can, to some extent, share the burden makes life so much easier.


Learn how lawsuits work

Chances are, no one has told you that lawsuits don’t work exactly as you might think. It’s not necessarily about right and wrong, and the system doesn’t really care. It is unaffordable to fight right and wrong unless you have an unlimited cash reserve. Instead, it’s about finding an outcome that makes business sense. It is generally understood that 95 percent of lawsuits settle prior to trial. In a lawsuit, there are usually multiple options for you to explore that will resolve or settle the case.


Remain calm

During the lawsuit, the plaintiff may try to strong-arm you into a tight spot with fancy legalese. It has happened to me, and it throws me off every time. That is, until my lawyer told me they were blowing smoke. Expect to be thrown off and do your best to remain calm and stand your ground so you don’t make hasty decisions.


Be extra frugal

Unfortunately, a very painful part of a lawsuit is the mounting cost. It is important to hope for the best, but plan for the worst. That means if you don’t already have a significant cash reserve, start building one immediately and find ways to cut unnecessary business expenses.


Don’t forget to rebuild

Once the lawsuit is over, another difficult part of the journey begins. For me, it was rebuilding my brand and myself. I took a step back and reevaluated what I was building towards until I was happy with the answer. Fortunately, nothing changed aside from an increased level of determination and a passion to take my company to new heights. We also thanked our clients who stood by us during the lawsuit, who had helped further strengthen our position in the industry even while facing these serious charges.


At the end of the day, unyielding perseverance and determination will allow you to overcome whatever you’re up against in business. When you encounter a lawsuit it can make you feel like the world is set against you; however, once you’re done with the battle you’ll realize it’s just a normal part of business. Welcome to the big leagues — you’ve been noticed.

Editors Note: Disclaimer: This article is for informational purposes only. It is not legal advice.


This article has been edited and condensed.

Fehzan Ali is the co-founder and CEO of Adscend Media and is responsible for driving and implementing the strategic vision of the Company. He is an industry thought leader, providing editorial content about innovative ad-based solutions.


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