Although litigation risks can be minimized, litigation is a fact of life in the United States. Here are some suggested steps to take if you or your bank is sued.
- Contact Your Attorney First. Supply him or her with all relevant documents, including any insurance policies. The amount of time you have to file an answer or other responsive pleading varies by jurisdiction. There is also a very strict rule of thirty days in which to remove a state suit to federal court.
- Notify Insurance Carrier and Evaluate Insurance Coverage Issues. Even if you are in doubt, you should notify your carrier immediately because many policies will deny coverage if there is a failure or even a delay in notifying the insurance company. Plus, at a minimum, the insurance company may provide you with a defense under a reservation of rights.
- Gather Materials. Act quickly to gather materials, but do not conduct an in-house investigation. You should pull together all documents, e-mails, computer files, paper files, and electronically-stored information available. Do not interview witnesses or conduct an internal investigation unless advised by counsel. Such conduct may serve to make you, or the investigator, into a witness or may be perceived as tampering with witnesses. You may also generate new evidence (e.g., interview notes).
- Person in Charge. One person should be in charge of all communications regarding the litigation. Instruct all nonparty employees that any inquiry from lawyers or the press should be referred to the officer in charge. Similarly, all former employees who were management level (or if their statements could be construed as binding admissions) should not speak with opposing counsel until cleared with your attorneys. Remind all current and former employees that discussion of matters relating to the litigation can waive important privileges of confidentiality.
- Institute a Litigation Hold. Once you have been sued, or if you should know that you are going to be sued, it is impermissible to destroy, eliminate or alter potential evidence or things that may lead to potential evidence. This includes the obvious category of documents and correspondence, but it also extends to the not-so-obvious e-mails, hard drives, audio or video recordings, text messages, social media, or other electronically-stored information. Among the things not to do in the event of litigation is to try to destroy the evidence trail, either before or after you actually get sued.