So You`ve Been Sued ... Now What?
by: Greg D. CrosslinIf you have never had a claim, been sued or worried about a claim or being sued, then you don't need to read any further.
In today's economy, however, litigation and lawsuits constitute a cost of doing business. While this is unfortunate, this is a fact of economic life. There are, however, certain understandings and tactics applicable to all lawsuits and the purpose of this article is to discuss some do's, some don'ts, and some absolutes with regard to any litigation you're facing. Obviously, you should discuss any of these aspects with your own counsel when you are involved in any suit and these are merely intended as a guide of basic information. There is one theme, however, that should permeate every lawsuit or litigation exposure in which you are involved and that theme is taught well by the Boy Scouts: Be prepared!
DO'S AND DON'TS
A. DON'T PANIC!
One of the worse things you can do when faced with litigation is panic. While nervousness, anxiety, apprehension, anger, and fear can overwhelm when first faced with a lawsuit, especially when it's your first lawsuit, one of the keys to controlling litigation exposure and costs is for you as a PCO to remain in control. For instance, do not immediately call the Plaintiff's lawyer and tell them that you will "take care of the damage" or "do whatever it takes" to keep your customer satisfied. Obviously, if your customer has already gone to a lawyer, it's too late to stop the lawsuit from being filed and anything you say can and will be used against you. So, the first lesson, is that you should not, under any circumstances, panic.
B. DON'T IGNORE THE LAWSUIT.
The opposite extreme of panic is for you to ignore the lawsuit. Litigation is a serious matter and must be considered as such. Failure to observe these can cause serious penalty, including a default judgment. Simultaneously, you have duties and obligations under your insurance policy which require that you take certain steps when you are first given notice of a lawsuit. Failure to follow these requirements can cause your coverage to be null and void and leave you without protection in the face of a lawsuit. At a very minimum, when you receive a lawsuit you should immediately notify your local insurance agent or broker and provide a written confirmation of delivery of the lawsuit to them. Ask specifically what your duties and obligations are with regard to reporting the lawsuit to your insurance company and this should be done immediately upon receipt of the lawsuit. You may also want to contact your own local attorney to discuss the lawsuit, coverage issues, and potential settlement opportunities at the beginning of any lawsuit. By all means, do not ignore it!
C. DON'T ABANDON THE LAWSUIT TO YOUR ATTORNEY
One of the most troublesome statements I hear from clients is that they have "turned over their lawsuit to their attorney and he is handling it." While you need to make sure that you have appropriate counsel handling your legal matters, you never want to completely turn over the litigation to someone else. This is your business. I feel confident that you test drive any vehicle before you purchase it, examine your products before you put them in use, and certainly don't leave the training of your employees to some unknown outsider. By the same token, you should not merely turn over your legal affairs to an attorney, whether you hired them or they were hired by the insurance company on your behalf. Being prepared, being involved in a lawsuit, and defending your reputation, your image, your assets, and your future requires your participation from the day you get the lawsuit until the day the lawsuit is resolved. Do not abdicate responsibility for your business to someone else.
Just as there are three major "don'ts" with regard to lawsuits, there are three major "do's" which every PCO should understand and apply with regard to any litigation they are facing.
A. DO BECOME INVOLVED
Upon receipt of the lawsuit, contact your insurance agent or broker and find out what your duties and obligations with regard to the lawsuit are. Find out from the agent or your insurance company representative who will be handling the claim, what experience they have in handling a claim of this type and when you can meet with them. Make sure you thoroughly discuss all aspects of the case with your claims adjuster and do whatever it takes to educate your claims adjuster as to your business practices, the nature of the claim, and what you did in response to the customer's request and/or complaints. He or she probably will not know things like how to crawl a house or the difference between chlorpyrofos and choronicotinyl. Determine if any statutory or regulatory problems exist and be prepared to address them with your attorney.
B. BE PREPARED
This is more than just a maxim, it is a requirement to controlling litigation and performing good business practices. Generally, we never know which file a lawsuit is going to arise from and we always do our best to ensure that customers are handled properly, efficiently, and when claims do arise, they are resolved such that they do not turn into lawsuits. There are things we can do to prepare for litigation, however, once a lawsuit has been filed. These include having a complete and clean set of copies of the entire file immediately ready for your adjuster. Ensure that all of your policies and procedures have been in place and utilized by your staff, that the file contains all the appropriate documents, that there is an explanation or summary, if you will, of all actions taken by you not only with regard to response to litigation, but also from the very first contact with the homeowner. Remember, your lawyer and claims adjuster can represent you only with the information you provide, so any preparation you do here will have tremendous benefit down the line towards litigation defenses. Equally, the preparation necessary to review one's files often spins off an internal analysis such that this type of preparation can serve to re-enforce a thorough review of records which often can help to prevent lawsuits in the future.
C. DO LEARN FROM LITIGATION FILES
There is nothing worse than having a repeated problem in a business......Any kind of business. So when a lawsuit does arise, find out what the basis of the lawsuit is and learn from them. The worst thing that can happen in a lawsuit is that the same mistakes are repeated and give rise to yet other litigation.
Generally, the above referenced do's and don'ts capture three areas, or items that warrant concern. There are, however, many more things that you can do with regards to defending your business, your practices, your assets, and your future. Generally, regardless of your specific carrier, your insurance company will have the right to select an attorney to defend you in any case. This is part of what you contract for when you purchase insurance. Obviously, you want to be defended by someone who has some experience in the arena, understands your industry, and has the ability to understand your specific business practices. Therefore, you must be prepared to and take the opportunity to educate any lawyer who represents you with regard to your specific business practices, what you do and don't do, what your policies and procedures are, and how the specific file was handled. Only you should educate your attorney about what you do and/or did in the file.
Of course, a great deal of this information can be gleaned when you first purchase your insurance policy/coverage and it appears to be a good, sound business practice to inquire from your respective insurance carrier who they might hire to represent you in the event of a lawsuit and why that firm is selected. After all, it is your business that is on the line.
Greg Crosslin is a principal of Crosslin Slaten & O'Connor, P.C., 2400 Presidents Drive, Suite 300, Montgomery, Alabama, 36116, (334) 396-8882. The firm serves as general counsel to the Alabama Pest Control Association, represents and is a member of the N.P.C.A. and represents PCO's in 32 states, and the common wealth of Puerto Rico. Mr. Crosslin is a licensed attorney in both Alabama and Florida. Mr. Crosslin is a bug lawyer.
