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L Word What To Do If a Lawsuit Hits

May 1, 1995
Related Topics: Featured Article
The word "lawsuit" is often considered taboo around organizations. The loss of money, time and productivity can be so grave many companies don't want to think about it—instead, they focus on prevention. And while a little preventive medicine will certainly cut down on the probability of a lawsuit, there's no foolproof approach. Companies need to know what to do and what to expect when a lawsuit does hit. David Levin, an attorney at the San Francisco-based employment and labor law firm Berman Berkley & Lasky, provides a guide through the circuitous process of fighting a lawsuit.

To begin with, what's the first thing you should do when you're presented with a lawsuit?
In the case of a former employee [filing suit], one of the best measures to take is to embark on a damage-control process. You need to talk to all the decision makers that surrounded the incident or groups of incidents that you think gave rise to the conflict. Talk to them and make sure they're not disseminating any information. You need to have a centralized decision-making process so that all the information and all queries go through one office. I'd tell [involved employees] not to talk to anybody outside the company. You really want to restrict the flow of information—you don't want a lot of loose cannons out there making statements, especially because the workplace becomes a rumor mill. When you're hit with a lawsuit, people feel like they have the opportunity to run off at the mouth and make statements—usually based on conjecture.

What precautions should you take in regards to documents?
Secure your files, and I'm speaking broadly, as in computer information. What we advise our clients to do is to immediately change access codes, because one of the first things that a terminated employee will do is try to access the information they have so they can take that with them to bolster their case against the company.

Also in terms of the actual files—hard copies—you want to make sure they're put in a safe place and are accountable to one or maybe two people who have full accountability. You may want to have a log so that you can account physically for where the files are at any given time. Somebody would sign for them when they take them, describe where they were, for what purpose they were used, then sign in when they return the documents.

How do you do all of this while maintaining a comfortable work environment?
That is equally important. We're talking about businesses here, and you always want to make sure to protect the bottom line and preserve the workplace. You don't want to take a siege mentality and make the workers feel that something catastrophic has happened. You really want to preserve the same type of atmosphere. You don't want to take a repressive stance that makes people feel that they're going to be fired if they share information. But the problem is if you don't ensure that people are discreet, you could have claims for invasion of privacy or defamation lodged against the company, in the case of a wrongful termination.

Can you explain the first thing that happens after a company is notified of a complaint?
After about a month or so, the other side either answers the complaint, or they raise procedural objections saying that, under the law, the complaint is not valid. In the normal [legal] course, they answer the complaint. Next you embark on the phase of the litigation called discovery: Both sides have the opportunity to discover facts from the opposing side to determine what the value of the case is. Usually, it's during that part that both sides can really determine whether to call it quits or how much to ask for in terms of settlement. Until then you really don't know what all the facts are, because the complaint just makes allegations.

How are facts gathered during discovery?
How you get facts comes under several different vehicles. The most common way is by deposition—taking an oral interview under oath with various people. That could include various employees and the alleged wrongdoer. Another way to get facts is by requesting documents from the other side. Documents would include anything from the employee's personnel file pertaining to the damages they're claiming to medical or psychiatric visits they've had. It's also their employment records. Another way is something called interrogatories—standard questions that each side asks of the other.

The discovery phase lasts throughout most of the litigation. Usually toward the end of the discovery, both sides start to assess what the case is worth, and then they decide how they want to proceed. They have a few options. They settle the case, or they set it for a trial, or they decide on a method of alternative dispute resolution.

What different kinds of alternative dispute resolutions are there?
One kind is mediation, where the parties sit down and mediate the case by talking it out and trying to reach some resolution. A mediation is never binding. If one party loses, they're not stuck with that—they don't lose their right to a trial. Mediation is really a win-win situation because, unlike a trial or an arbitration, nobody is saying who's right or wrong; the parties themselves come up with their own agreement.

Arbitration is another form of alternative dispute resolution, and that's like a trial, but the nice thing about arbitration is it usually only lasts a day or two. Oftentimes it's less formal than a trial. You hear evidence and produce witnesses, but it's usually done in the confines of an attorney's office with a neutral arbitrator. That's either binding or nonbinding, depending on what the parties agree to.

What are the benefits of alternative dispute resolutions?
When you use processes like mediation, what you're doing is giving the parties a chance to talk very soon after the incident. You're attempting to solve problems internally and giving both sides a chance to address each other before attitudes have become hardened. By contrast, once attorneys get involved and a decision is made to prepare the case for a lawsuit, and you're one year down the line, the case can look very different; people get angry and there's less of a chance of repairing the workplace. [Alternative dispute resolution] can save money and help keep up morale.

Before deciding to go to court, are there signs that may hint that it's wiser to call it quits and settle?
Normally if you have a good working relationship with an attorney, they'll be able to determine how much a case is worth and how advantageous it would be to explore different settlement options. What you have to do is look at the facts of the case. Go through the file and find out what the reasons were for the [complaint]. And you also have to do a little research into the law and know how certain situations are regarded under the law. In other words, if you have allegations of sexual harassment, and the party accused of being the harasser voluntarily stops harassing, and the employer hasn't done anything to put together a plan to make sure that future incidents of harassment [won't occur], that's not good enough. An attorney or legal adviser should be able to tell you that. You can assess early on how far you should take the case based upon a look at the file and facts of the case in conjunction with what the law is.

Finally, in a worst-case scenario, if you lose in a trial, what's the best way to present this to your staff to keep morale from waning too much?
I think the problem is, if that becomes the issue then you probably haven't done your homework all along. What you need to do is take steps well before that, so if you've gotten to that point then it's no longer an issue. You need to let employees know that they're part of the process. That shores up morale so that if things don't go your way during a trial, at least you've been able to preserve the status quo. Because if you haven't done that I don't know that there's a quick-fix solution once you get a verdict against you. What that would tend to do is make employees who've felt they were left out of the process the whole time further alienated from the company. Again, there's a very fine line here. There needs to be a sense of keeping people informed but not have information leak out unnecessarily. You want to keep those twin goals in mind.

Personnel Journal, May 1995, Vol. 74, No. 5, pp. 115-118.

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