According to a December 2023 study by the U.S. Chamber of Commerce Institute for Legal Reform (ILR), litigation costs small businesses $160 billion in just one year.
But what if we told you that you could resolve your business disputes without stressing over reputational and financial losses, all while saving time?
That’s right–navigating complex business litigation can be easier with just a couple of key strategies and considerations suited for a modern enterprise like yours.
How?
Continue reading to find out all about the importance of understanding the legal framework of business litigation, developing a strong legal strategy with experienced legal counsel, and managing litigation risks and costs.
Understanding the Legal Framework of Business Litigation
What makes the legal framework of business litigation so challenging is that multiple sources and levels of law influence it.
That means that, depending on the nature and scope of your dispute, business litigation may be subject to federal or state laws–or both. In some cases, federal law and state law may even overlap or conflict with each other.
In addition, business litigation may be governed by common law, statutory law, or–you guessed it–both!
Finally, business litigation may also be affected by international laws or treaties, especially in cases involving cross-border transactions or operations.
As you can see, any modern enterprise needs to have a clear understanding of the legal framework of business litigation, as it can have a significant impact on their rights, obligations, and strategies.
Here are just some of the examples of how the understanding legal framework of business litigation can be beneficial to your business:
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It can help you identify the applicable laws and regulations to your specific situation.
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It can help you determine the appropriate jurisdiction and venue for filing or defending your lawsuit.
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It can help you comply with the procedural rules and deadlines for initiating or responding to legal action
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It can help you assess the potential risks and benefits of pursuing or settling a legal claim
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It can help you develop a strong legal strategy that aligns with your business objectives and values
Developing a Legal Strategy for Business Litigation
This next phase of business litigation involves a comprehensive evaluation of your specific circumstances and aims to lay the foundation for a strong and effective litigation strategy.
Some of the circumstances and objectives that could influence your legal strategy include:
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The type and amount of your claim
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The legal issues involved
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The potential remedies and defenses
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The available evidence and arguments
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The resources your business has
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The experience and the reputation of your business
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The relationship between the parties
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The jurisdiction, venue, rules, procedures, judges, juries, as well as the expectations of the court
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The financial costs and benefits of litigation
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The risks and opportunities of litigation
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The alternatives and consequences of litigation
Depending on your unique circumstances, some strategies and options may be better than others for your business.
For example, if you want a faster, cheaper, and more confidential way of resolving a dispute, your business may favour negotiation. The major con of negotiation, though, is its lack of enforceability.
Some other alternatives to litigation are mediation and arbitration. These are some of the more flexible, participatory, and respectful dispute resolution options, but they each have their disadvantages too.
Mediation is non-binding, while arbitration can be biased, and it sometimes may not allow for appeal or review (not always, though! ).
Finally, if you decide to go to trial, you can count on it being authoritative, consistent, transparent, and comprehensive for all parties involved in business litigation.
On the other hand, this option is usually rather slow, costly, rigid, and unpredictable, and it’s highly likely to damage your relationship with other parties involved.
Managing Litigation Risks and Costs for Business Litigation
You’re probably already familiar with the majority of the business litigation risks, but let’s get over some of them quickly:
First and foremost, there’s reputational damage.
Depending on what happens during the litigation, your business may lose the trust of its customers. Or, it may lose the loyalty and goodwill of its suppliers, shareholders, and employees. Ultimately, it may even lose its market share.
Then, there’s financial loss.
Litigation can lead to increased expenses and liabilities, which may decrease your cash flow and assets. This can affect your business’s ability to invest, grow, or even survive.
Also, operational disruption is probable due to litigation.
Business litigation can divert your time, attention, and resources away from your activities if you let it. In turn, this may affect your productivity and the quality of your work.
Last but not least, litigation can expose your business to regulatory scrutiny or various enforcement actions by government agencies and industry bodies. Penalties, restrictions, or revocations of your permits could permanently damage your business, no doubt.
So, what can you do about all of this?
Well, for starters, you can do your due diligence.
You can do that by gathering and analyzing information about your business environment, the applicable laws, involved entities, assets, potential issues that may affect your business, and so on.
You can also implement some risk management policies, including standards, procedures, and audits to follow to remain compliant with the law.
Some other things you can do is allocate your resources to an in-house or external legal counsel, as well as communicate openly with other parties affected by litigation.
These tactics can help you resolve and settle your litigation risks and costs, and improve your relationships and reputation.
The Importance of Experienced Legal Counsel in Business Litigation
Remember how we started this article off by highlighting the importance of understanding the legal framework of business litigation?
That’s what legal counsel is for.
Business litigation is no joke, and you’ll need someone who:
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Has technical expertise and industry knowledge
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Knows how to present persuasive arguments and compelling evidence in your favor
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Has negotiation skills to maximize your benefits and minimize your liabilities
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Understands how to enforce your rights and obligations
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Will preserve your reputation and goodwill along the way
All of this can be secured if you hire legal counsel specializing in business litigation to represent you and advocate for your interests in court.
And now we come to the most important question: how do you find such legal counsel?
Well, you could certainly ask for recommendations from other business owners or friends with business experience, and then check websites for relevant experience.
If that’s not a viable option, we’d suggest looking for a law firm with business-minded deep industry experts who are not afraid to take on big and intimidating cases involving industry leaders.
For example, when you go to the ,,Find your case” section of the Watts Guerra LLC law firm’s website, you can see that they’ve had plenty of experience and shown admirable expertise in complex litigation.
They’ve been offering representation to victims of Maui wildfires, they’re helping women with autistic children go after drug companies who’ve claimed that Tylenol was safe for consumption during pregnancy, and they’re after J&J for their carcinogenic Talcum Powder…
That’s the kind of proof of expertise in complex litigation that you want to see.
Conclusion
In summary, understanding the legal framework, developing a solid strategy, managing risks, and securing experienced legal counsel are integral components for navigating the complexities of business litigation.
These factors collectively shape the trajectory of your business in the legal environment.