Nothing in life is perfect. Almost inevitably during the course of your business, somebody, somewhere is going to feel aggrieved and whether validly or not will threaten to sue your company.
When a threat to sue is made it can feel very personal and could have significant implications for your business. It is therefore easy to forget that such threats are usually born out of frustration and, in 99.9% of cases, there will be either some truth or at least the belief of some truth in the underlying issues forming the complaint.
When the initial threat to sue is received it is vital to treat it seriously and obtain as much information as possible, so that you can investigate the veracity of the complaint and risks to the business. This will enable you to formulate a strategy to deal with the claim appropriately
Invariably, after receiving the initial threat to sue, you should always seek professional advice but how should you respond to that initial threat, be it during an unexpected telephone call or by email?
When responding to the initial threat there are a few key points to remember:
- Listen lots, speak little;
- Do not accept liability;
- Gather as much information as possible during the call;
- State that you need time to consider the claim;
- Obtain the individuals contact details;
- Give confidence that the matter will be taken seriously and that you will revert with a full response within an agreed time frame (always give yourself plenty of time to respond).
Following the initial contact, you should immediately gather all relevant correspondence and contracts and assess if there is a genuine legal issue or if the complaint relates to service levels or customer expectations. You may want to consider instructing external solicitors to undertake the assessment for you.
Bear in mind that the creation of paperwork should be kept to an absolute minimum and, if any documents or memos are created, they should have a very limited circulation so as to protect privilege.
Your review should identify one of the following: (i) there is no liability and the response to the threat can therefore be minimal; (ii) there may be issues that need to be addressed and so specific legal advice should be obtained and/or a without prejudice settlement offer made; or (iii) there may be no liability but other considerations, such as reputational issues, need to be considered.
Finally, you should always consider whether you have relevant insurance cover and, if so, whether your insurer should be notified of the threat.
If you are interested in any of the topics raised in this article, or for further information, please contact Lloyd Smith. Alternatively, you can call to speak to one of our team on 0115 9888 777.