What to Do When Your Business Gets Sued in New York or New Jersey
When a Lawsuit Arrives
Receiving a summons and complaint can be unsettling. Whether it involves a contract dispute, an employment claim, or a disagreement among business partners, a lawsuit is a formal court process that demands careful and timely response. Ignoring it can result in a default judgment, meaning the plaintiff may win automatically.
In New Jersey, a defendant generally has 35 days to serve and file an answer after receiving the summons and complaint (N.J. Ct. R. 4:6-1).
In New York, the time to respond depends on how service was made: 20 days after personal delivery or 30 days after service by any other method (CPLR § 3012[a]).
Missing these deadlines can forfeit your right to defend the case.
Understanding Service of Process
Every lawsuit begins with service of process—the formal delivery of legal papers notifying you of the claims against your business. This includes the summons (which tells you when and how to respond) and the complaint (which outlines the plaintiff’s allegations).
Proper service is more than a technicality; it’s a constitutional requirement under the Due Process Clause of the Fourteenth Amendment, ensuring fair notice and an opportunity to be heard.
In New York, service on a corporation may be made through the Secretary of State or an authorized agent (CPLR § 311[a][1], Business Corporation Law § 306).
In New Jersey, service may be made personally, by certified mail, or through the corporation’s Registered Agent (N.J. Ct. R. 4:4-4(a)(6)).
If your business receives papers in an unusual way or from an unfamiliar source, do not ignore them. Even if service seems improper, consult counsel promptly so objections can be raised within the required time.
Understanding Jurisdiction and Venue
Lawsuits must be filed in a court that has both jurisdiction and venue—that is, legal authority over the parties and the proper geographic location for the dispute.
A company headquartered in New Jersey but doing business in New York might face litigation in either state depending on where the events occurred, contracts were signed, or harm was alleged. Sometimes, the first strategic move in litigation is to challenge jurisdiction or venue, especially if the case was filed in the wrong forum (see CPLR §§ 301–302; N.J. Ct. R. 4:3-2).
Read the Complaint Carefully
The complaint is the plaintiff’s statement of allegations—claims they intend to prove, not evidence. This phase of litigation is known as the pleading stage.
At this stage, the court assumes the factual allegations are true only to decide whether they state a legally sufficient claim. The defendant may respond by filing an answer (admitting or denying each allegation) or by filing a motion to dismiss (see CPLR § 3211; N.J. Ct. R. 4:6-2), arguing that even if the allegations are taken as true, they do not amount to a legal violation.
Understanding that the complaint is only a starting point—a set of allegations tested “as a matter of law”—helps businesses respond with clarity and avoid overreaction.
Preserve All Evidence
Once a lawsuit is filed, both sides have a duty to preserve evidence that may relate to the dispute. Do not delete emails, discard contracts, or overwrite digital files. Courts can impose sanctions for the destruction of evidence, even if unintentional (see Fed. R. Civ. P. 37[e], often applied by analogy in state courts).
Implement a litigation hold immediately. Preserve relevant emails, text messages, and business records. Early organization can save substantial costs later during discovery.
Notify Your Insurer
If your business has general liability, errors and omissions (E&O), or directors and officers (D&O) coverage, notify your carrier right away. Many policies require prompt notice to trigger coverage. The insurer may appoint defense counsel or reimburse defense costs depending on the terms of the policy.
Consult Counsel Promptly
Each case is unique, and early action matters. An experienced business litigation attorney can evaluate the complaint, determine procedural options, and design an efficient defense strategy. Timely representation helps avoid default, missed defenses, or unnecessary costs.
Early Case Assessment
Before investing heavily in litigation, a sound defense starts with an early case assessment—a structured review of the claims, available evidence, potential exposure, and likelihood of success.
This assessment helps businesses decide whether to fight, negotiate, or pursue early settlement. It also sets realistic expectations for time and cost, and ensures decision-makers stay informed.
Understand the Litigation Timeline
Most business disputes follow a predictable path:
Pleadings. The complaint and the answer (or motion to dismiss) establish the legal framework. Courts decide whether the allegations, if true, state a valid claim—not whether they are factually accurate.
Discovery. This phase can be the most burdensome and costly. Both sides exchange documents, emails, and deposition testimony to uncover the facts. In business cases, discovery may involve reviewing thousands of pages of records, internal communications, and financial data.
The process often requires negotiating search terms, privilege logs, and protective orders (see N.J. Ct. R. 4:10-2, CPLR §§ 3101–3126).
Discovery can consume significant staff time and legal expense.
Good planning and clear communication with counsel help manage costs and minimize disruption.
Motions. Parties may seek rulings on specific issues, such as dismissing claims, limiting discovery, or obtaining summary judgment (CPLR § 3212; N.J. Ct. R. 4:46-2).
Trial or Settlement. Many cases settle before trial, but meaningful settlement discussions usually occur only after discovery clarifies the strengths and weaknesses of each side’s case.
Considering Mediation or Arbitration
Not all disputes go to trial. Many commercial contracts contain arbitration clauses, requiring parties to resolve disputes privately before an arbitrator rather than in court (see Federal Arbitration Act, 9 U.S.C. § 1 et seq.; N.J.S.A. 2A:23B-1 et seq.).
Even when arbitration is not required, mediation—a voluntary, confidential negotiation facilitated by a neutral third party—can be an effective way to resolve cases efficiently and preserve business relationships. Experienced counsel can advise whether ADR is appropriate and when it offers strategic advantage.
Litigation Costs and Business Disruption
Litigation can strain not only finances but also operations. Legal fees, document collection, employee time, and management attention all come at a cost.
A good litigation strategy considers these broader business impacts. Sometimes the best outcome is a negotiated resolution that limits expense and allows the company to refocus on its core mission.
Preventive Lessons
Every lawsuit provides lessons. Disputes often reveal gaps in contract drafting, recordkeeping, or communication. After a case concludes, businesses should take time to evaluate:
Are contract terms clear and enforceable?
Is insurance coverage adequate?
Are internal policies updated and followed?
Preventive legal review and strong documentation practices can dramatically reduce the likelihood and cost of future disputes.
Stay Professional and Strategic
Litigation is stressful, but professionalism matters. Avoid contacting the opposing party directly, posting about the case online, or letting frustration drive decisions. Focus on long-term strategy, not emotion.
Conclusion
Being sued does not mean you did something wrong—but how you respond in the first few weeks can shape the entire outcome. By understanding service of process, jurisdiction, the pleading stage, and the demands of discovery, your business can navigate litigation with clarity and control.
Disclaimer
This article is provided by Good Pine P.C. for general informational purposes only and does not constitute legal advice or create an attorney–client relationship. Legal outcomes depend on specific facts and applicable laws, which may vary by jurisdiction. For advice regarding your situation, please consult a qualified attorney.
Attorney Advertising. Prior results do not guarantee a similar outcome.
