3 Mistakes Artists and Small Business Owners Make at Small Claims Court
No one wants to go to small claims court. Unfortunately, sometimes it cannot be avoided. Here are three mistakes small business owners (including artists and musicians) make when taking their case to small claims.
Not hiring a lawyer when you actually need one
While it is always beneficial to have then advice of counsel, there are some situations where a person must hire a lawyer if they wish to recover money or defend themselves. Some jurisdictions (like Washington D.C. and Federal Courts) require retaining a lawyer if the dispute is between a person’s business entity (like an LLC or S-Corp) and another party.
2. Not serving the right person
In order to recover from a business entity (like an LLC or S-Corp), the business entity must be served properly. Each state requires the designation of an agent who is authorized to accept service on behalf of the entity. The address of the designated agent should be searchable on a state agency’s website. It is critical to serve the designated agent because anything short of that will not be sufficient for a case to proceed. Even if an entity has actual notice of a lawsuit, they still must be served properly.
3. Not planning on enforcing the judgment
Even if a person (or entity) wins at small claims court, a defendant is not required to pay the plaintiff on the spot. After winning a judgment, a person (or entity) must enforce it. This requires new court filings, serving the defendant again, and a new court date. This should be accounted for when considering a settlement. Is it worth taking less money in a settlement rather than wait to enforce a judgement in the future that a defendant might not be able to pay? It can be a difficult decision. Anything can happen. A defendant may have money at the moment, but none in the future for a variety of reasons. People need to understand how long the entire process takes before declining a settlement.