We've Been Served!
Survival Tips for Nonprofit Defendants
By Melanie L. Herman
Shock, anger and disbelief - all are common reactions to being served with a civil lawsuit. Few nonprofit leaders or board members expect to be defendants in a lawsuit. As a result, when you find yourself or your nonprofit in the difficult role of defendant, you may be angry and find it hard to accept that anyone, especially someone who knows firsthand the nonprofit's good works and meager resources, would seek monetary damages. Fortunately, many nonprofits will never be sued, but it does happen, and a current or former employee or client could be the plaintiff you'll be facing in court.
Whether you are named as a defendant in a lawsuit or are helping your organization defend a lawsuit, litigation can be frightening and frustrating. They definitely are time-consuming, expensive and difficult. With adequate preparation before the process begins and guidance while litigation is underway, the distraction caused by a lawsuit can be minimized. You can survive a lawsuit while continuing to fulfill your nonprofit's mission.
First Steps First
When an accident happens, begin by making certain that the injured party receives immediate, appropriate care. After the injured party is cared for, document the incident and report it to your insurance broker, whether or not you think there is going to be a claim. Insurers can't investigate an incident that they don't know about. Document accurate statements from witnesses immediately, when the event is fresh in their minds, because it's difficult to get the same facts from witnesses a year or more after the incident. Similar steps should be taken to record and report an incident.
Should a lawsuit be filed as a result of the accident or incident, no matter how far in the future, by documenting the situation promptly and carefully, you can make the case easier to defend and be managed more successfully. Forwarding immediately all demand letters and lawsuit papers to your insurance broker; and cooperating with the claims investigator and attorneys by providing honest answers and prompt information will also be to your advantage.
Strengthen Your Position
A lawsuit doesn't have to ruin your life or destroy your organization. There are many things you can do to strengthen your position. Here are a few tips:
- Make a note of how and when you were served with a summons and a complaint. A summons tells you who has filed the lawsuit, the name of the attorney representing the plaintiff, in what court the suit will be heard, and the deadline for filing a response to the suit. Generally it requires a response in 30 days or less depending on where it's received and by whom. A complaint is typically a lengthy narrative explaining the plaintiff's allegations. Don't dodge service; it accomplishes nothing and can create difficulties between the parties.
- Notify your insurance broker and insurer(s) immediately. Don't delay. Send a complete copy of the summons and complaint to your broker, and call to let him or her know it's in the mail or coming by messenger. Ignoring the suit won't make the lawsuit go away, but it can jeopardize your insurance coverage and even make you lose the case by default. The plaintiff's attorney can enter a default judgment against any defendant who is even a little late (minutes, not days) in filing an answer. The court records a judgment for the plaintiff against you or your organization even though there has been no trial, and no showing of fault. It's absolutely critical that the response be handled correctly. In some cases your insurer will want to receive the papers directly: ask your broker to clarify the reporting requirements for your particular coverage.
- Get organized and don't panic. After the initial impact of having been served with court papers has subsided, get organized for the paper and activities to follow. Even when the lawsuit comes as a complete surprise, nothing is accomplished by panicking.
- Create a file. The process of setting up a file where you'll keep important documents pertaining to the lawsuit helps on two fronts: emotionally and strategically. You'll be less angry and frustrated than if the paperwork is allowed to consume your workspace. You'll view the suit as one project - and keep it from consuming every workday. Creating the file allows you to maintain some control in a situation that usually feels like it is spinning out of your control.
- Mentally prepare yourself to have this lawsuit be a part of your life for awhile, but resolve not to let it monopolize you. Place the newly created file in a locked cabinet and stay organized and on top of the paper flow that is certain to follow the initial lawsuit. Do your best to make the lawsuit just another of the many projects in your life.
- Don't alter your records. Look at your incident report to see what happened, but don't make any changes, additions or deletions to any documents. Don't dispose of any documents you think may be harmful. Chances are someone knows that piece of paper exists and has a copy. You'll only look foolish to the other side and dishonest to the court.
- Don't talk about the case except with your insurer or the defense attorney hired to represent you and/or your organization. Never, never call the plaintiffs or their counsel to discuss the case; whatever caused the lawsuit won't be resolved by you at this point. Discussion, however, could jeopardize legal privileges by talking with those who don't have a legitimate reason to know about the details of the suit or your analysis of your position.
- Cooperate in obtaining all of the documents, records or other information when requested by your lawyer. Speedy cooperation is essential. Be sure the originals are in a safe place.
- Don't over- or understate the facts when you talk to your insurer or your defense attorney. It's likely that your insurer and your defense attorney will want to have an in-depth discussion concerning the accident or incident. It does no good to shade the facts one way or the other. In the end, the truth will come out. Armed with the truth, your attorney can better build a defense and possibly reduce the impact of even the worst of facts. Don't make an assumption about the importance of any fact; leave that up to your lawyer. The worst possible situation for an attorney is to be surprised on the eve of trial with a fact that changes the entire complexion of the lawsuit.
- Don't let politics or emotions prevail over good sense. Your first reaction may be to contact a friend in the media in the hopes of disclosing the "real facts" to the public to absolve your nonprofit of wrongdoing. Don't do it. When an organization does this, it can be very damaging and make it harder for your attorney to help you, or have the claim handled properly.
- Strive for the best outcome. A completely happy ending - one without any damage or costs or disruption - is probably not possible. Keeping the damage to your organization to a minimum is the best outcome. Your first goal is to restore the organization's focus on its mission and contain the degree of injury the nonprofit will suffer. A settlement is often the most appropriate course of action to reach this goal.
- Resolve to do this right. Sometimes the steps in the process will seem cumbersome, repetitive and unnecessary. Despite the hassle, provide accurate, thorough information to your insurance company and your attorney. In the long run, this type of cooperation can make or break your ability to survive a lawsuit.
The Next Time
At the conclusion of a lawsuit, review the composition of the defense team, the relationships and methods of communicating with counsel, your broker and your insurer, the strategy for keeping other organization projects moving, and other key elements of the process. Evaluate how changes in your approach to the lawsuit would have made the process less painful or costly.
You can survive a lawsuit. How? Keep your cool. Take advantage of available expert help. Respect deadlines. Stay organized. Don't let the process consume your life. Most important, remember that the mission of your nonprofit - not the lawsuit - is what truly matters.
To Learn More
This article was adapted from The Best Defense: 10 Steps to Surviving a Lawsuit, published by the Nonprofit Risk Management Center and Nonprofits' Insurance Alliance of California.
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