Thursday, August 13, 2009

Representing Your Business in Small Claims Court

If I am doing my job correctly, none of my clients should get sued in small claims or any court, but sometimes it happens. Sometimes businesses have to sue a customer or another business in small claims court. Recently I have received a lot of phone calls seeking counsel on how to proceed in small claims. While in most states you are not permitted to be represented by an attorney in small claims, you are allowed to consult an attorney outside of the small claims court and in preparing your case.


The key to success in small claims starts with the law and facts being on your side, but more importantly it is more about being organized and how you present your case. It is easy to snatch defeat out of the jaws of victory by being unorganized and ill prepared. The following are a few tips to help you successfully represent your business in small claims court.


  • WHO GOES TO COURT WHEN A BUSINESS IS SUED OR IS SUING – If you are the only owner of the business, you usually must go to court unless the claim can be provide by evidence of a business account in which case a regular employee with knowledge of the account may represent you. If you have a partner, one of you must go. If the business is a corporation, an employee, officer, or director must go to court. That person can’t be hired just to represent the corporation.
  • BE ORGANIZED – Just like an attorney, you need to present your case in an organized manner. Every judge knows that the parties in court are not lawyers and are usually nervous, if not terrified. However, having exhibits and documents organized makes the chances of success much higher because it makes the case go smoother, especially if you are trying to collect money on an account.
  • WITNESSES – Witnesses can appear in small claims court and can testify in front of the judge. Because witnesses are perceived as having the ability to be impartial, their testimony can be valuable for the judge as he or she conducts the hearing to gather evidence for the decision. Some states (but not all) allow witness statements to be presented to the judge; these statements have to be in writing and signed under “penalty of perjury.” Most judges prefer to have a witness physically present in the courtroom; it is easier to cross-examine a witness than it is to cross-examine a written statement.
  • LOOK AND ACT PROFESSIONAL – Despite the relative informality of small claims court, it is still a professional place. Being well dressed and professional makes a good impression on the Court. The courtroom employees, from the judge down to the court clerk, are all dressed in a professional manner. If you are appearing before the Court, you should also be dressed professionally. As a business owner you should dress in business attire. If you can’t afford a nice business suit, at least put on your “Sunday Best” outfit. Do not go to court in jeans, t-shirts, a hat and/or tennis shoes.
  • BE COURTEOUS – The Courtroom is not a place to pick fights with your opponent. It is also not the place to “talk over” anyone else. Most importantly, it is not a place to argue with the court. This is very difficult for people in emotional cases but a very important thing to remember. The Judge is there to resolve a dispute and it is difficult to do so then the parties are arguing in the middle of the case. All the court is interested in is the facts. Be prepared to go into court with the idea of presenting your cases and countering the other side in a respectful and dignified manner.
  • DO NOT OVERSTATE YOUR CASE – Make sure that your facts and damages fit what you are suing for. Never lie or “over exaggerate” anything. I have heard of instances where counterclaims were filed in breach of contract cases for “pain and suffering” just because they were sued. People have also padded their damages claims just to get back at the other side. Small claims cases are usually straightforward claims for compensation. Filing for extreme damages will weaken your case and your credibility. Also, adding irrelevant claims diminishes the effectiveness of the relevant claims. It is a very good idea to run your case by an attorney first to determine which claims you should file.
  • TRY TO SETTLE – Once a matter is heard in small claims court, you lose control of the outcome. Settlement is always an option up until the day of trial. In fact some courts encourage the parties to “mediate” the case on the day of trial. Sometimes this is a good option. Even if you get all of your damages from a Judge, you have to collect the judgment. If you work out a settlement before trial and the party pays you that day, you have the money in hand. The Judge may even do a settlement on the record for you.

Many states and counties have Small Claims Help Centers or websites that have specific information about their courts and procedures. I highly recommend that you avail yourself of these resources. If you can’t find any resources were you live feel free to contact me at dalexander@outhousegeneralcounsel.com and I can help you out (for a nominal fee of course).


6 comments:

  1. So can an in house counsel go to small claims for the corporation he/she is an employee of?

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  2. Hi Mr. Alexander II,
    Can you elaborate on that? I thought even an in-house counsel can't go to small claims since no attorneys are generally allowed in small claims.

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  3. WHO GOES TO COURT WHEN A BUSINESS IS SUED OR IS SUING – If you are the only owner of the business, you usually must go to court unless the claim can be proved by evidence of a business account in which case a regular employee with knowledge of the account may represent you. If you have a partner, one of you must go. If the business is a corporation, an employee, officer, or director must go to court. That person can’t be hired just to represent the corporation.

    As I stated in the post, if the business is a corporation (same holds true for an LLC), if the in-house counsel in an employee, officer or director of the corporation or a member, manager or employee of the LLC, the in-house counsel can represent the company. The attorney cannot be hired just for the small claims hearing, in other words you cannot hire an attorney to represent you on a small claims matter. In CA, you can retain an attorney to "appeal" a small claims decision.

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    Replies
    1. Thank you so much. That was very helpful. Love your blogs.

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  4. Thank you! Please let me know if there is something you want me to write about.

    ReplyDelete