4 Lessons for Surviving a Frivolous Lawsuit

They say in a lawsuit the only winners are the lawyers. I always thought that was funny, until I had to defend a frivolous lawsuit. I had   no idea how bad it could be when someone sued you, without any basis or merit. I went through a frivolous lawsuit for about a year and a half, and it’s much, much worse than I had imagined. There’s a couple things that I’d do differently and a couple things that I wish I knew that I needed to be prepared for. That’s the reason I want to share that experience here and also explain how this frivolous lawsuit led me to have to close one of my business locations with my business, Sam’s Safety Equipment. For my employees, my customers, and my family I hope this explains why I’ve been so nerve wracked.

You should always ask a lawyer’s advice but take it with a grain of salt.

1.  Ask & Listen

The best lawyers are the ones that you know personally and trust. One of the things I learned is always consult a lawyer, always. Taking my lawyer’s advice, I won’t go into the details of the case here. I’ve found that every lawyer will give you doom and gloom advice. And why not? No one comes to them with a case that doesn’t have an issue. They literally make a living addressing problems and live in a world of worst case scenarios. You should always ask a lawyer’s advice but take it with a grain of salt. Things aren’t always doom and gloom, but with a frivolous lawsuit, listen to them. I don’t always take my lawyers advice, but I always go into a decision knowing the consequences if I’m wrong. When your business supports your family and the families of your employees that’s very important. If you don’t know a general business lawyer, then you need to start asking around for who your friends trust, then buy that lawyer a beer, or three. Find someone that can relate to you, won’t charge for a conversation, that knows your business. You want them anticipating your problems before you realize you’re in over your head. You can’t know a lawyer for every problem you’ll face, but the best referral source for a lawyer is another lawyer. If you make a strong connection out of your lawyer they’ll point you to who you need to know. It’s also a good idea to know more than one good business lawyer. For example, my CPA is also a lawyer, he brings a whole new perspective to legal matters and has his own circle of lawyers he can refer me to in a jam.

When the oil & gas downturn happened in 2015 I wanted to explore options with a bankruptcy attorney. I was referred to this lawyer by my usual business lawyer. Again, they all know each other. The bankruptcy lawyer was surprised that we were talking since I had 6-12 months of runway in my business. He said he usually only sees companies when they should have filed for bankruptcy a month before they meet with him. I like having contingency plans and safety nets, even though we didn’t get close to bankruptcy the meeting gave me some insight on what to look for and avoid. What problems a bankruptcy would fix and what it wouldn’t. I asked and listened.

Handshake deals only last as long as people stay friends, stay alive, or stay sane. Legal documents don’t have emotions.

2. Write It Down

Any time you do something important in your business with more than one person involved, get it in writing, and each person should have their own lawyer review it. One of the things I grew up hearing from my Dad was the value of man’s word and a handshake deal. Lawyers were a waste of money. In fact, about 3 years into owning my business, after buying out my father I spent over a year restructuring the business and re-documenting all our transactions, deeds, and so forth. My dad thought it was crazy to waste money on these things at the time, but it’s what saved us during the lawsuit. Handshake deals only last as long as people stay friends, stay alive, or stay sane. Legal documents don’t have emotions. After all the fighting in our frivolous lawsuit my dad doesn’t complain when I want something written up, even if it’s between us. He insists on it and I appreciate it when he does. While I trust my dad more than any one else I’ve known in business it also helps when we have bad memories that we can turn to the same document and confirm or correct our selective memories.

I had a commander in combat that would comment on the fact if I came into a meeting without pen and paper. He said it showed that I didn’t expect anything important to come up that was worth writing down. He was right then and it’s right for your business now. If your business is as important to you as mine is to me then write it all down. Get documents reviewed by lawyer, even notarized, if it’s something important.

The time to shake hands is over, it’s time to start swinging.

3. Friendliness is Expensive

When you get sued, your first instinct may be to sort things out with the person suing you. Be rational. Be understanding. But all you need to understand is this person or party just started a fight, being friendly is not a strategy to win. Friendliness is a good way to throw money away. Initially in our case I didn’t want to be too aggressive. I knew we hadn’t done anything wrong, so I assumed once the information from discovery was displayed they’d see the error of their ways. Man, was I wrong. Discovery was just a way to load me down with onerous requests that had no basis on the case. It was a huge time suck for me in my day-to-day role in the company and since I wasn’t aggressive, neither were my lawyers. I was basically paying lawyers to shuffle pay, conduct filings, and appeal to the better angels of people that could care less. Did I forget? They are the ones that sued me! Why should I have been trying to play nice?

Depositions, where the opposing lawyer grills you in a small office, looking for you to slip up and give them leverage on you in the case. If you’re like me and regularly put your foot in your mouth, this is a dangerous event. Remember, that lawyer isn’t your friend. When you answer, you only answer the question.

• No Context
• No Qualifiers
• No Explanations
• No Backstory
• No Emotions

That’s the one thing above all else I’d do differently. Getting served for a lawsuit is the ring the opening of bell in a fight. The time to shake hands is over, it’s time to start swinging. Friendliness will cost you more than a big legal bill, it will cost you your business.

...it was the first time I felt terror. Terror that something my dad, his partner, and I had spent years (decades in their case) building and growing.

4. Distraction

The one thing I was most unprepared for was how distracting a lawsuit, even a frivolous one can be. It wasn’t just the time wasted doing discovery and meeting with lawyers. It was like a haze was between me and my business. When the lawsuit ended, after a year and a half in the midst of the worst oil & gas downturn in over 30 years I couldn’t believe what I saw. I’d been missing opportunities in my business, I’d been missing warning signs, I’d neglected my employees, and worst of all I’d neglected my family. I don’t know what I’d have done differently, this was unlike any other business challenge I’ve ever experienced. I’ve had sleepless nights before worrying about sales, employees, or this and that. But as the lawsuit drug on it was the first time I felt terror. Terror that something my dad, his partner, and I had spent years (decades in their case) building and growing. The idea that it would all be taken away by someone who didn’t care about the business, the employees, the customers, or the owners was agonizing. It was like worrying about indirect fire (mortars) in combat, there’s nothing you can do except duck your head and pray it works out. But when everything is going wrong it’s hard to be focused on anything positive. That’s a tailspin of negative self-talk that is hard to pull out of. I know it led to turmoil at home and at work. The only advice I can give to avoid becoming so distracted is find something outside the business to blow off some steam and some sweat. Being physically exhausted is different from being emotionally exhausted from a lawsuit, the former helps you sleep while the later seems to compound the exhaustion with sleepless nights. This was also the most I’ve gone to church at night to pray by myself, but even then, it was hard to concentrate.

I hope that this helps someone avoid this experience or at least endure it.

Those are my four lessons and advice for anyone wondering what a frivolous lawsuit is like, as the defendant. If you find yourself in my shoes I wish you the best, feel free to reach out. Misery loves company, as they say. And if you’ve been down this road before I’d love to hear your lessons learned in the comments to this post. I hope that this helps someone avoid this experience or at least endure it. In the end this distraction, coupled with the ongoing oil & gas downturn, forced me to close one of my showrooms in business. I had been so distracted by the case I missed opportunities and didn’t see my balance sheet getting unbalanced as we kept moving things around to keep paying legal fees.