When You Get Sued (Not If): How to Respond Without Imploding

From Chapter 10 of Bulletproof Your Marketplace

By Jeremy Gottschalk

If you run a marketplace or platform, let me give it to you straight: you’re going to get sued.

It might not be today. It might not even be this year. But if you scale—and especially if you succeed—it’s only a matter of time. That’s not fear-mongering. It’s the reality of operating in the high-stakes, highly visible world of digital platforms.

In Chapter 10 of Bulletproof Your Marketplace, I break down exactly what to do when that lawsuit hits your inbox. Because the decisions you make in those first hours and days? They can define the outcome—and even the future—of your company.

Lawsuits Are a Cost of Doing Business

I’ve helped platforms navigate lawsuits big and small: personal injury claims, class actions, intellectual property disputes, regulatory enforcement, and more. One thing is always true: the worst time to figure out what to do is while it’s happening.

You need a plan, and you need to understand your role—not as a victim, but as a steward of your business.

You don’t control whether someone sues you. But you do control how you respond.

Step One: Don’t Panic. Do Document.

When a complaint comes in, resist the urge to freak out—or worse, go silent. Your first job is to preserve everything:

• Save all communications related to the user or issue

• Pull logs, metadata, incident reports—anything relevant

• Lock down internal conversations so you don’t compromise privileged info

You’d be amazed how many platforms make a bad situation worse by deleting, editing, or emailing things they shouldn’t. That’s how you go from a winnable case to a regulatory disaster.

Step Two: Call Your Lawyer (And Your Insurer)

Yes, you need legal counsel. And not just any lawyer—someone who understands platforms, marketplaces, and the specific risks you’re facing.

But here’s the thing: you also need to notify your insurance provider ASAP.

Many founders forget this step—or delay it. Huge mistake. Your coverage could be denied for late notice. And if you have coverage for the claim, your insurer may provide defense counsel or reimburse legal fees.

Chapter 10 walks you through how to give notice properly, what documentation to send, and what to expect from your carrier.

Step Three: Control the Narrative

Getting sued is about more than the courtroom—it’s about the court of public opinion.

If the lawsuit involves user safety, discrimination, or public harm, the media may find out. If it’s a class action or a regulatory complaint, investors and partners may hear about it.

Your comms strategy matters.

• Who speaks for the company?

• What do you say to users?

• What do you tell the press?

• How do you manage internal team morale?

In the book, I share strategies to stay transparent without admitting liability, and to show leadership even when you’re under fire.

Step Four: Decide How to Fight (Or Settle)

Not every lawsuit deserves a scorched-earth defense. Some are worth fighting. Others are better resolved quietly.

I’ve seen platforms waste millions in legal fees chasing the principle of being right—only to lose the war.

I’ve also seen startups settle too quickly and open themselves up to repeat claims.

Your decision should be strategic, not emotional. Ask:

• What’s the actual exposure?

• Could this set a precedent?

• Are there reputational risks?

• What’s covered by insurance?

• How will this affect ongoing operations or fundraising?

A smart legal team won’t just litigate—they’ll help you manage risk, protect your brand, and preserve value.

Step Five: Learn, Document, and Harden

Every lawsuit is a lesson. Once the dust settles, debrief and adapt:

• Update your terms of use

• Strengthen policies or procedures that failed

• Add internal training

• Patch product vulnerabilities

• Evaluate whether additional insurance coverage is needed

I always tell founders: if a lawsuit doesn’t leave you stronger, you missed the point.

Lawsuits Don’t Have to Be Catastrophic

I’ve seen platforms recover from lawsuits—and even come out better positioned, with tighter operations and stronger user trust.

But I’ve also seen platforms implode because they:

• Panicked and made unforced errors

• Said the wrong thing publicly

• Ignored legal obligations

• Treated the case as a distraction, not a risk

In Chapter 10, I give you the mindset, tools, and frameworks to survive and thrive through litigation. Because getting sued isn’t a sign of failure—it’s a sign you’ve arrived. How you handle it is what separates the platforms that last from the ones that don’t.