Small Claims Can Save You Big Money
Grow Your Business, Not Your Inbox
One of the best things a small-business owner can do to save money on legal bills is handle smaller matters yourself, sans attorney. This means finding your local small claims court and figuring out how you can use it as a cost-effective way to recoup business losses.
All 50 states have small claims courts, frequently divisions of district, county or municipal courts. Don't be turned off by the "small"--in many states, you can sue for up to $10,000, which covers a lot of rubber checks.
Some advantages of small claims court:
- A streamlined, user-friendly system, with filing and follow-up help from the clerk's office
- No need to tote along your attorney
- Service on the defendant (typically the clerk's office will send a certified letter), with personal service available at slightly extra cost
- A simpler courtroom procedure, with rules of evidence loosened
Your experience might run something like this: You try to work out a solution with your adversary, fail and decide to sue. Check the legal name of the person or business you're suing, along with their address, telephone number and other relevant information, such as a Social Security number or employer. Make sure you have a case to begin with--you must prove that the person or business owes you the money. You can't recover any money unless you can prove damages, no matter how obnoxious the other person was to you. General sliminess and uncivilized behavior won't support a lawsuit.
Write a narrative of how and when you were damaged, and your recovery attempts. Bring all your proof to the clerk's office, where you'll file your case for a nominal fee-usually $25 to 50. (You can recover these costs if you win.) Be sure to file in the right jurisdiction-usually where the defendant lives or does business, or where the incident took place.
When you get to court, be organized and brief. Read the complaint and be able to explain it, including why the defendant owes you the amount you're suing for. Have your paperwork organized, with copies available for the other side. And don't forget that person in black who's in charge. Direct your remarks to the judge, not the other party. Speak clearly and loudly enough to be heard. Maintain eye contact with the judge.
If your opponent doesn't show, you may win a default judgment against him or her. With any win, you're the judgment creditor. The loser or judgment debtor must pay within a certain time period. If he or she doesn't, the court can help you file questions (sometimes called discovery) to ferret out the defendant's property. Ask the clerk for help in attaching assets to satisfy the judgment, or "garnishing" (having your opponent's employer reserve part of) his or her salary.
By making your local small claims court a vital business tool, you may just build your own swimming pool instead of your lawyer's.
Joan E. Lisante is an attorney and freelance writer from the Washington, DC, area. A graduate of LeMoyne College and New York Law School, she is licensed to practice in New York, Virginia and Washington, DC.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.