How to Manage When Your Marketing Agency Gets Sued

How to Manage When Your Marketing Agency Gets Sued


As the owner of a marketing agency, you advise clients every day on how to build their brands. Reputation means a great deal in the competitive business environment. And they must do all they can to avoid damaging it.

One of the strategies you have covered with the PR team is dealing with lawsuits. You impress upon your clients about how to avoid reputational damage when this occurs.

Ironically, you now find yourself in the same position. A client is suing your firm for breach of contract and failure to deliver on a marketing campaign.

Many thoughts immediately come to mind. Topmost is what will your other clients think about this. You know that if the word leaks out, it could be the end of your company. 

In the worst-case scenario, the case could drag on for years. You already know the financial and emotional impact on everyone in the company will be quite significant. 

So, other than the burden of the lawsuit, you must manage clients, stakeholders, and employees.

We cannot say that you are in for an easy time. If the plaintiff is eyeing a court case, it will be tough. But, there are steps you can take to manage the situation.

  1. Find the Right Legal Representations

The first thing you need to do is to find the right legal representation. Business attorneys have the expertise to deal with such lawsuits. Arm yourself with the necessary documents and get ready for some honest discussions. 

The attorneys will want to review the case with you in great detail. They need to ensure zero culpability on your end.

There are some things you should never do when facing a lawsuit.

  • Do not, under any condition, try to speak with the plaintiff. The same applies to their lawyers. Once the case enters the legal system, leave it to the attorneys. Let them do their job of trying to exonerate you of any liability.
  • Do not ignore the lawsuit, hoping it will just go away. There is a specific period within which you need to respond. Your lawyer should help you make the right action at this time.
  • Do not try to destroy or hide any information. Share everything relevant to the case with your lawyer. Yes, these include any documents that may seem to support the plaintiff’s case. It is better for the attorney to have the information early, rather than have it come up during the trial.

Do note, not all cases end up in court. The lawyers can seek out of court settlement, which sometimes is the best-case scenario.

  1. Continue Business as Usual

It might be difficult, but you must continue with business as usual. Other clients are requiring your attention. If you neglect them, they may start to wonder if everything is alright.

At this time, one concern may be about finances. You are likely to spend quite a bit on attorney fees. To stay afloat, you may need to dip into your savings. Since lawsuits can take years, they could deplete what you have in reserve.

Another good option is to look for sources of upfront cash like those offered by legal funding companies. They can provide relief by lending you cash to pay bills as you wait for the outcome of the cases. The advantages of this type of borrowing are numerous, including:-

  • Quick turnaround for approvals. In less than 24 hours, you could have the funds
  • Fast loan approval, sometimes only requiring a phone conversation
  • The legal funding companies will not run credit checks. That means your credit score will not have an impact on an approval
  • Free application and zero hidden fees.

Pre-settlement loans provide a quick way to access funds to tide you over the litigation period.

Please note that you will also need to talk to your insurance providers. Some business insurance covers can take care of some of the costs. These include general liability and professional liability.

  1. Adopt a No-Comment Policy

Many parties are involved in a lawsuit, whether directly or indirectly.

  • There is you, the defendant
  • Company employees
  • Company stakeholders, comprising partners, suppliers, etc.
  • Clients
  • The general public, including the media

Start by being clear about who can speak about the case. Ideally, it should be management or the PR communications team. The spokespeople should have clear guidelines on what to say?

Communicate about the litigation to the employees and stakeholders. For the latter, decide on who needs to know. Not everyone should be privy to the information.

As a marketing agency, you probably have relationships with the media. The story about the lawsuit could leak to them. They may start calling you to find out what is going on. The best way to deal with the situation is to avoid offering any comments.

Inform employees that they do not have permission to talk to the media. Ask them to forward any interview requests to you and let the attorneys handle them. Depending on the gravity of the lawsuit, the lawyers may decide to react or not.

  1. Communicating With Clients

With clients, the no comment policy may not work. Unfortunately, the media interest may expose the information to some of your clients. As a marketing agency, you should have a crisis management policy. Refer to the document on how to communicate negative information to clients.

For a company that deals with reputation management, clients need to know that you are on top of things. They should never worry that their association with you could taint them in any way. 

The end goal is to build confidence and avoid panic, which could result in loss of business. The communication should provide clarity without going into too many details.

Final Thoughts

Facing any lawsuit can be difficult. As a marketing agency, you may have helped a client or two navigate through the process. But now you find yourself in the hot seat. 

Your first course of action must be to find the right legal team. These attorneys have the experience to deal with such cases. 

Keep up with servicing the other clients as usual. And, don’t forget to communicate with the relevant stakeholders. They should hear about the lawsuit from you and not the media or grapevine.