You’ve been served!

This column’s headline will invariably strike fear in the hearts of anyone who has ever had a stranger walk up to them and blurt out, “you’ve been served.” Whether you’re the CEO of a Fortune 500 company or the proprietor of a one-person shop, this experience can send a cold chill down the uninitiated’s back.

Unfortunately, it’s just a matter of when, not if, your company or you will be served with a legal notice of a complaint. Litigious America has become the bane of businesses of all sizes. No individual or organization is immune.

The first step after this notice is not to say or do anything other than call an attorney. Once a company is notified that it’s the subject of a lawsuit, you’ve already “passed go,” and you won’t be collecting $200. Instead, you’ll pay much more, one way or the other.

Managing a legal complaint is not a DYI project. Abraham Lincoln said it best, “A man who is his own lawyer has a fool for a client.”

I vividly recall being served for the first time and proclaiming to whoever was in earshot, “We’ve done nothing wrong, and we’ll never pay.” The initial part of my assertion might have been right, but the second part, not so much. I was naively thinking linearly, as in either right or wrong, and if it was the former, we were going to fight. When we fought, we usually prevailed. While it might have cost only $10,000 to settle, I painfully recall that when we stood our ground for this initial bout in the legal arena, we spent six figures and an inordinate amount of time so that I could indulge my righteousness and prove our innocence.

After choosing to stand our ground a few more times as a matter of principle (and a bit of ego, too), we got a harsh lesson in litigation economics. Winning doesn’t come cheap. As my first company grew, I turned over run-of-the-mill settlement decisions to our attorneys. They had the leeway to settle, provided the number was no higher than the predetermined bar. It boiled down to a cost-benefit analysis, no matter whether we were right or wrong. Of course, I wasn’t always happy about every negotiated settlement, but I came to live with the decisions. I did, however, insist that we not get a reputation as an easy mark to avoid even more ambulance chasers.

It’s unlikely in the U.S. that the constant barrage of frivolous litigation will ever end, for the simple reason that it’s cheap and easy to file a suit and, in some cases, it does get the other side’s attention.

If “you’ve been served” in business, first determine, after weighing the facts, if it’s better to spar or strike back. Many times, it’s more productive to find a happy medium and then try to compromise and move on.

For good or bad, I reluctantly stopped taking the company being sued as a personal afront. Squandering resources on legal gymnastics can be an exercise in futility because too many times, when you win, you still lose. ●

Visit Michael Feuer’s website to learn more about his columns, watch videos and purchase his books, “The Benevolent Dictator” and “Tips From The Top.”

Michael Feuer