While few business owners want to go through litigation, many will have to at some point in their company’s operations. Knowing what to expect in the litigation process can relieve some of the stress that comes with a legal dispute.
What Causes Business Litigation?
Some of the most frequent causes of business litigation include:
- Breaches of contract
- Employment-related issues, such as wrongful termination, discrimination, retaliation, and wage-and-hour claims
- Intellectual property disputes, including disputes over licensing agreements or infringement/misappropriation claims
- Partnership/shareholder disputes, such as management deadlocks or breach of fiduciary duty claims
- Regulatory compliance issues, including environmental, securities, healthcare, or tax compliance
The Key Stages of Business Litigation
Litigation involving a business will go through several main stages, including:
- Investigation: First, a business facing a potential legal dispute will need to investigate to gather all available evidence. This evidence can help the business understand its legal position and develop compelling arguments.
- Pre-litigation and demand letters: A legal dispute begins when an aggrieved party sends the opposing party a notice or demand letter notifying them of the legal claim and demanding some specific relief to resolve the dispute. After the demand letter, parties may negotiate a settlement to avoid taking their dispute to court.
- Pleadings: When parties must resolve their business dispute in court, litigation begins with the pleadings. The plaintiff in a business litigation will file a complaint that sets forth the plaintiff’s allegations, claims, and demands for relief. The opposing party, called the defendant, can file an answer to respond to the allegations in the complaint and assert counterclaims against the plaintiff. Alternatively, a defendant may file a motion to dismiss the complaint by arguing that the plaintiff failed to allege facts stating a claim to relief.
- Discovery: After the pleadings stage, the parties will engage in discovery, exchanging evidence and deposing witnesses to narrow down the issues in dispute for trial.
- Pre-trial motions and proceedings: Parties will also engage in pre-trial pleadings, which may involve motions to admit/exclude evidence or motions for summary judgment to resolve issues before trial.
- Trial: At trial, the parties can present arguments, evidence, and witness testimony to convince a jury or judge to rule in their favor.
- Post-trial proceedings and appeals: Parties can file various post-trial motions to seek relief from the verdict and judgment. Alternatively, parties may file appeals to challenge the trial court’s rulings.
Alternatives to Litigation
Businesses with legal disputes may seek alternatives to traditional court litigation, such as mediation and arbitration. They may also engage in informal negotiations with an opposing party to settle a dispute.
Mediation constitutes a more formalized settlement negotiation process facilitated by a neutral third party called a mediator. Mediators do not decide any portion of the parties’ case. Instead, their role involves helping the parties to see the strengths and weaknesses of their respective cases and suggest solutions for a settlement.
Arbitration provides a trial-like alternative to court litigation. In arbitration, a neutral third party or panel of individuals called arbitrators sit in the role of judges and factfinders. An arbitration hearing resembles a court trial, with the parties presenting evidence, witnesses, and arguments. After the parties present their cases, the arbitrator or arbitration panel will issue a binding decision/award that the parties can take to court to convert into an enforceable judgment.
Tips to Mitigate Litigation Risks
Business owners and managers can manage the risks of their companies becoming embroiled in legal disputes or litigation by following several tips, including:
- Ensuring the company has thorough, well-drafted contracts that avoid ambiguities that could lead to disputes
- Having clear company policies and compliance/enforcement procedures
- Documenting all communications during business transactions and operations
- Having experienced legal counsel to assist through all stages of a deal or the business’s operations
Contact a Business Litigation Attorney Today
If your company has found itself in a legal dispute headed to litigation, turn to an experienced business litigation lawyer from Mitchell Law, PLLC, for help asserting your rights and protecting what you’ve worked so hard to build. Contact us today for a confidential consultation to discuss your company’s legal options with our knowledgeable team.