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What happens if your online business is sued?

On Behalf of | Apr 17, 2023 | BUSINESS LAW

If you have an online business and experience a lawsuit, the impact will likely reach far beyond the declaration of the final judgment. But when you understand the process and know what you should expect, it can help you control the damage and prepare you for the experience. This is good to know if you have an online business in California.

Can your brand survive the suit?

A lawsuit inevitably tends to damage your brand. This damage isn’t always easy to quantify, and you won’t always know immediately how much of a blow your brand has taken. With a significantly tarnished brand, it might be impossible to regain the trust of your clients or customers. At the very least, winning them back will take some serious effort.

There’s also the financial burden of business litigation. This is bound to take a toll on your profits. The cost varies depending on the type of case, whether or not you have insurance and if the case is covered. There will be a range of expenses, such as the cost of lawyers and fees associated with filing in court, not to mention your loss of business.

Your costs tend to go up substantially if you lose your case and you have to pay damages. Payments related to contracts will have a limit on them, but punitive damages can be much higher.

Other companies might not want to work with you

A lawsuit may also strain your business relationships because your suppliers and clients may no longer feel comfortable doing business with you. This isn’t always the case because some lawsuits cannot be avoided. But with severe enough allegations, it’s common for other business entities to keep their distance to avoid getting caught in the crosshairs.

There’s a chance that it will be more difficult to form new connections with other companies. This is particularly true if you lose the lawsuit.