What to Do If Someone Sues Your Singapore Business
Doing business carries inherent risk that needs to be actively managed. This includes having a claims management plan that can be quickly activated in the event of a claim being made against your business.
If you follow the following simple steps, your business will be significantly more prepared to deal more efficiently with the disruption caused by being sued. It will also be better-placed to protect its interests from the very beginning.
1. Engage Your Legal Department or an External Counsel
If your business has a legal department, alert them immediately and let them take the lead in driving the response to the claim.
For example, your legal team will be able to first advise you on whether your business is actually being sued. If the legal document you have received is a letter of demand, your business is unlikely to have been sued yet. On the other hand, if you have received a writ of summons, this is clear indication that your business is being sued.
If you are a small or medium enterprise with no legal department, you need to:
- Identify a suitable external counsel as quickly as possible if you don’t already have one; and
- Engage them to respond to the claim.
2. Enter Appearance
Within a certain number of days of being served with a summons in a suit, your business will need to enter appearance. Failing to do so would result in a default judgment being entered against your business. In the vast majority of cases then, it is imperative that your business enter appearance before the deadline.
There are certain exceptional circumstances in which it may be strategically preferable to ignore the summons and allow default judgment to be entered. However, this is not a decision to be taken lightly and should be made with comprehensive legal advice that is specific to your business’ actual circumstances.
For this reason, the priority upon being served a summons should be to identify and obtain preliminary legal advice from external counsel within 48 hours of being served.
3. Seek Advice From Your External Counsel
Specifically ask your external counsel for advice on the way the summons was served. If your business was improperly served, it may have a procedural defence to the claim that would force the adverse party to refile the suit. This would buy you more time to start gathering evidence for your defence.
4. Conduct an Internal Investigation
In order for your instruction of counsel to be as efficient, and therefore as economical as possible, you should do your best to conduct an internal investigation to find out all the facts that are relevant to the dispute. This includes:
- Gathering all documentation related to the dispute; and
- Interviewing staff with knowledge of the facts and summarising what they know.
5. Conduct a Basic Factual Analysis
Set out briefly in writing:
- What actually happened that led to your business being sued
- If the dispute arises out of a contract, what was supposed to have happened under the terms of the contract
- Any defences you think your business may have by reference to the specific claims being made by the adverse party
As far as possible at this stage, conduct a rough preliminary financial analysis that attempts to quantify the real financial impact to the adverse party of the actions taken by your business which is alleged to have caused them loss.
Armed with this information, your external counsel will be much better positioned to take swift early steps to advance your business’ interests.
6. Notify Your Insurer
Consider whether the suit triggers any insurance notification requirements. A suit in relation to certain subject matters may well be a risk that your business has insured against. If so, your insurer will want to be involved in decision making in relation to the suit.
In such circumstances, you would need to notify your insurer by a certain deadline set out in your policy. Failure to do so would entitle your insurer to refuse your claim.
Once you have done all this and actually engaged an external counsel to act for you in the matter, that external counsel should be able to take the lead on driving the case strategy thereafter.
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