I have been sued twice in my life. Both lawsuits were over the same business deal (without going into detail, it was in connection with a transaction I was not involved with when it occurred) and my naming as one of many defendants was frivolous (I’ll explain why this happens below). The suit against me was dropped in both. Even having a legal background and knowing the merits (or lack thereof) of the “case”, it is never fun being sued. But, it happens from time to time. The key to understand why it happens and the process and, why, in 99 times out of 100, the sky is not falling.

First, I want to dispel two myths about lawsuits. There are a lot of stories about people being sued left, right and center and how you can now get sued for walking down the wrong side-walk. In my professional experience, most middle-class families who mind their own business, pay their debts on time and behave like rational people towards others do not get sued. Don’t get me wrong, people always threaten to take you to court but when the plaintiff’s lawyer asks for a $5,000 retainer to begin proceedings, it tends to put a damper on their enthusiasm.

Second, hardly anyone goes to court. Most litigation lawyers will tell you that only 2 of 100 lawsuits ever get to trial. Most lawsuits die a quiet death- there is no case to begin with, the length of time to bring a proceeding to trial (think years) is simply too daunting for people and, most importantly, people run out of money and settle. The Court system is also geared towards settlement now. I got sued in Small Claims Court. Before you ever get to court, you have to get past settlement conferences where Justice of the Peace persuade you to settle. The entire system is structured to force settlement as not to tax their limited resources.

Having said all of that, here are a few things to keep in mind:

1. Sometimes you get sued because of what they think you know and not what you did. Do you want to know how most criminals are caught? It is not by CSI. Someone rats out the criminal to the cops. A lawsuit works on a similar manner- sue as many people as possible who may be involved in the transaction and, because lawsuits scare people to death, someone will talk. The goal of the plaintiff’s lawyer is to find the true wrong-doer (or the party with the deepest pockets) so she, to use the legal term, uses the shotgun approach- try to hit everything and see what sticks. For example, lawsuits for trademark infringement (think knock-off products) are usually aimed at the retailer or distributor. The lawyer will release the retailer/distributor from legal liability (with the payment of associated legal fees) if they reveal the true source (in other words, give up the person we really want). Is it intimidation? Of course it is, but that is how the game works. I was named for information which I didn’t have. End of case.
2. Don’t reason. Just defend vigorously. When you get sued the wrong thing to do is to call the plaintiff’s lawyer or the plaintiff and try to work something out. The more you talk, the more ammunition you give to the other side (answering a lawsuit is like dealing with the tax authorities- answer the question asked- no more, no less). Seek legal help. Immediately. Put in a strong defense. The defense speaks for itself and will either make the plaintiff drop the suit (as in my case) or force settlement (which happens a lot of the defense points out a lot of inconsistencies or counter-sues the plaintiff- i.e. you are telling the other side, you will turn this into a long and costly process even if you have no intention to). If you have been sued because you owe someone money, the usual defenses are: (i) they didn’t do the job properly and you want to pay less; (ii) you don’t owe what they said you do and will contest the amount claimed; or (iii) you have no money regardless so accept a payment plan. Putting in no defense is the absolute wrong thing to do- the plaintiff will win by default and, in most jurisdictions, can recover 100% of the monies claimed (plus legal fees in some cases).
3. The worse thing you can do is act like you are liable even if you are not. Suddenly transferring assets to your spouse, taking large amounts of money out (which is how Eliot Spitzer got caught) or destroying/altering evidence is tantamount to digging your own grave. If you have a strong case, why are you acting like you don’t (not to mention there are laws reversing transfers of money to avoid payment to creditors when in default)? Don’t lose your head because you have been sued (see above on keeping your mouth shut). If you have to, have the melt-down in front of your lawyer behind closed doors. Your conduct during the proceedings can be used against you to attack creditability and truthfulness. If you truly have no case then start talking settlement after you file a defense.
4. These things take time. Dealing with a lawsuit is like life- there is no silver bullet answer and it takes time. It took 5 months for my suit to be dropped (and that was in Small Claims Court where the procedure is supposedly faster). The Court system is a bureaucracy like any other so the wheels of justice move slowly. Don’t wind yourself up thinking it will be over soon. Your lawyer will call if there is a development (don’t call them, it only increases your legal bill for no real reason). Most of all, breath in and out. In most cases, you will settle based on your ability to pay. Most jurisdictions have laws limiting what can and cannot be seized to satisfy a lawsuit. Thus, they cannot take the shirt off your back (in most proceedings, the plaintiff will start asking questions on your ability to pay; if your net worth is modest, there may be no cost benefit to pursuing you further given on-going legal expenses; in many ways, being poor is a great defense). The stories you hear of ruin are exceptions rather than the rule (remember the media reports on the extraordinary and not the mundane).

Lawsuits take a funny life of their own. The key is to try to keep calm, follow the rules and procedures set out (and don’t try anything stupid- trust me, lawyers and judges have seen all the tricks and know a dozen you haven’t thought of) and hire professional help. Good luck.