Running a small business isn’t just about your product, your vision, or your bottom line. It’s also about people – and people are complicated. So at some point, if you lead long enough, someone on your team might say something that sends a chill down your spine: “I’m going to get a lawyer.”

That sentence, while terrifying, isn’t the end of the world. It also doesn’t mean you’ve done anything wrong. But it does mean the situation has shifted – and you need to shift with it. How you respond in that moment matters more than anything that came before it.

Let’s walk through how to stay calm, protect your business, and lead through one of the toughest conversations you may ever have.

Start by Slowing Down

The first instinct most people have when they hear the word “lawyer” is to either over-explain, shut down, or lash out. None of those are helpful. What you really need to do is pause.

A simple response like, “Thanks for bringing this up. Let me take some time to look into it and I’ll follow up with you,” can buy you the breathing room you need. It tells the employee you’re listening, without agreeing, admitting anything, or escalating the issue.

You don’t need to resolve everything in that moment. In fact, trying to do so might backfire.

It Might Not Be What It Sounds Like

Let’s be honest – not every legal threat is real. Sometimes, it’s someone venting. Sometimes, they’re scared or frustrated. Sometimes, they feel unheard and want to regain control. But none of that changes your responsibility as the employer.

You have to take every hint of a legal concern seriously – even if you think it’s exaggerated or based on a misunderstanding. Because once someone starts using language around legal action, retaliation, discrimination, or unpaid wages, they’re stepping into a protected category. Any action you take after that point will be viewed through a legal lens – even if your intent was neutral.

Don’t Retaliate – Even Accidentally

This is where so many small business owners get themselves into trouble. They don’t think they’re retaliating – they’re just making decisions.

Maybe the employee was already underperforming. Maybe you had already considered letting them go. But once they raise a legal concern, the game changes.

Do not reduce their hours.
Do not cut off communication.
Do not isolate them from the team.
And do not fire them – not yet.

Even if your reasons are legitimate, the optics will matter. And if you’re not working with HR or legal counsel, you might walk straight into a retaliation claim without realizing it.