Running a business is both as rewarding as it is challenging at the same time. While you are busy building your brand, growing revenue and client base, chances are high that you may not be able to give much attention to other aspects of your business that may potentially have a legal twist to it. Litigation is one such area that, while it may not occur very often over the lifetime of the business, the few times that it may happen, even if it is just once, can sometimes be enough to cripple a business.
Research shows that nearly 36% to 53% of small businesses face at least one case of litigation in any given year, while around 90% of US corporations are engaged in some type of litigation in any given year, says Litigation Trend Survey conducted by Fulbright & Jaworski.
What is Business Litigation?
Business Litigation refers to a practice area of law that deals with situations when a business’s owner, employees, clients or competitors cannot solve their business issues or disputes on their own, and therefore resort to a court of law to resolve the conflict. The victim or plaintiff files the lawsuit against the offender or defendant to seek compensation, usually monetary, from the defendant.
These business conflicts can take many different forms and to deal with such cases, business law attorneys will usually offer their legal expertise to help all parties try and resolve the conflict through the legal process. However, in a few cases, these conflicts are resolved outside the court through a mediation or arbitration process.
Common Types of Business Litigation:
Given the above-referenced research, it is safe to say that at some point, your business is likely to face one type or case of litigation. A few common types of business litigations that you must be aware of are:
- Intellectual Property Litigation:
Conflicts can easily arise relating to matters of intellectual property (IP,) which can include several subtypes such as trade secrets, patents, copyrights, and trademarks. In this type of lawsuit, legal assistance is usually to first write a demand letter to the offending party, after which it may be necessary to proceed with a lawsuit if the demand letter does not produce the desired effect.
More often than not, pursuing a lawsuit against the defendant means that the owner of the IP is trying to recover for damages received as a result of the IP violation, while at the same time also prevent the other party from continuing to infringe on the rights of the owner.
- Breach of Contract:
A breach of contract is one of the most common causes of business litigation. Contracts are of many different types relating to a very wide range of subject matter, ranging from employment, service delivery obligations, product purchases, payments and many more. The diversity of the subject area matter from where a contract breach can occur, is exactly why litigation involving contract breaches are the most common types of litigation issues.
In such cases, the plaintiff will either be seeking monetary compensation for damages suffered as a result of the breach and/or an order compelling the defendant to fulfill their end of the contract. Or it may involve any other appropriate remedy demanded by the plaintiff.
- Conflicts with Employees:
These types of business conflicts are focused on a worker’s claim when any unfair treatment or false allegation occurs. Employee disputes encompass things such as harassment, hostile or biased work environment, promotion or termination on the basis of age, gender or race, wage disputes, healthcare, family leave, etc. These types of issues can often result in a lawsuit against the employer who may become liable to compensate for the damages the employee suffered if the judgment is found in favor of the employee.
- Partner, Corporate or Member Conflicts:
Relationships in businesses occur at various levels. These relationships are bound with obligations that guarantee good and fair dealings. Business partners and members are expected to fulfill their responsibilities with care and to share information with each other which is essential for making good business decisions.
For this, it is important that no conflicts of interest compromise the integrity of business decisions. It is however easier said than done. Disputes arise when there is a lack of open communication, or if partners don’t fulfill their obligations. This may lead to a breakup of the business. Given the contract signed among partners, a conflict can be dealt with through arbitration or mediation before taking the matter to the court.
If the partner(s) still feel the matter is not being resolved, it results in a lawsuit against another partner.
- Product Liability Litigation:
In case a consumer or client is suffered because of a certain product, this leads to product liability or personal injury litigation. These matters affect the reputation of a business or a particular employee. In these cases, the business owners engage the victim to settle the dispute through some sort of settlement or negotiation. If the victim does not agree, the matter is taken to the court through a lawsuit. There are few cases of personal injury or product liability that are settled through the court.
Attorneys Help in Business Litigations:
Given the type of litigation, the business attorney is supposed to perform several actions. In the first place, the attorney will begin the negotiations for the settlement purpose, can contact insurance companies, as well as communicate with the victims’ legal team. The paperwork is also done if required which helps in effective communication between both parties. This procedure helps in mitigating the conflict and prevents the matter to go to the courtroom.
For the resolution of business conflicts, you must have an experienced business lawyer with good skills in dealing with business litigation.