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Frequently Asked Questions About Business Litigation

A. Business litigation mostly entails disputes related to or stemming from business transactions between individuals or companies. The essence of business disputes involve some kind of contract (oral, written, or statutory obligations) that could arise from a tenancy, a sale of goods or sale of services.

A. If the dispute arises from a contract, the parties must have had a meeting of the minds as to what promises have been made, the amount that will be paid for services or products, and what went wrong with the deal they made. Sometimes the dispute centers on the quality of the product delivered, or the failure to pay on the contract. There are many ways in which business disputes arise, but if one side feels that they have been cheated, contacting a lawyer will probably result in resolution faster than trying to work out the dispute without the assistance of counsel.

A. While business litigation lawyers cannot head off the lawsuit, experienced attorneys can recognize problems and/or opportunities at the right time in order to guide the client to an early resolution. Attorneys will always recommend appropriate courses of action. Contract terms are examined to determine the validity of the contract. With the assistance of counsel, a business owner can weigh the risks and benefits of deciding to dispute a claim or resolve it by way of negotiated settlement. Lawyers are trained to evaluate the evidence on both sides and spot issues that may tip the scales in favor of the client or determine ways to minimize the effect of the less favorable evidence. Experienced trial attorneys find ways to put the evidence in the light most favorable to their clients. In addition, experienced trial attorneys understand and can explain the probable course of litigation to help the client plan the steps necessary to the most favorable outcome.

A. Business owners having to deal with employment issues, such as wage-hour claims, discrimination and wrongful termination claims, are the types of clients that have hired me. Commercial landlord-tenant disputes are common.

The number one issue in business litigation is breach of contract for purchase or sale of goods or services, but partnership dissolution issues sometimes turn into litigated matters, as do shareholder disputes. Construction agreements may result in lawsuits.

A. That it is easy and inexpensive to sue someone. Most clients underestimate the cost of litigation and don’t fully appreciate its complexities. Some of my clients seem to take the early position that litigation is played like a game, but it can take financial and emotion toll on everyone involved.

Another misperception is that there is always a “prevailing party” in every case and that the prevailing party will get the other side to pay the winner’s attorneys’ fees and costs. In some ways, when the hotly disputed litigated case is over, one side may have prevailed, but the cost is great on both sides.

A. The most important thing is a written chronology of events. The sequence of events—who knew what and when, what was done and why—is the framework upon which the case is litigated. Also, bring copies of any related contracts and amendments, letters and emails, text messages, photographs, etc. Any and all information related to the dispute may be of critical value to the experienced eyes of a business litigation attorney.

While it is sometimes expensive to gather this information and expensive to have it reviewed by the attorney, it is my experience that ignorance of all the facts is even more expensive because of the missed opportunities of an early resolution that come with a full and complete understanding to the dispute.

A. The biggest mistake is failing to put down the obligations of parties in writing. The second business mistake is failing to have an attorney prepare, or at minimum review, a critical contract before signing it. Many disputes could be avoided if the terms were carefully drafted by an attorney who is trained to avoid uncertainties and ambiguities.

Another big mistake is the failure to preserve and organize the critical documents related to a transaction.

Finally, there are times when I’ve been involved in cases where the client was guilty of “magical thinking” and denial, simply avoiding the issue early can sometimes turn small matters into larger, more complex matters.

A. Yes. You should produce a memorandum of understanding between the parties and ultimately you should specify the parties’ obligations and ownership stakes in writing. Such agreements include: shareholder agreement, operating agreement, partnership agreement, joint-venture agreements, etc.

Doing so with the assistance of counsel can head off a lot of headaches down the line.

A. Yes, but depending on which side you’re on (employee, shareholder, co-founder, CEO), your reporting and remedial actions or obligations may differ.

Contacting an attorney for advice before making any decision that could jeopardize one’s employment, or run afoul of the law, is always a good idea.

A. An attorney can examine the liabilities and obligations of the parties after a business is dissolved and take measures to avoid any issues down the road. It is not always easy to find a way to divide the assets and debts easily when the partners have a personal stake in the business. They are likely to see things with their “heart” rather than their “head.”

It is sometimes easy to forge that simply filing a corporate dissolution does not necessarily relieve the parties from their on-going obligations and liabilities. The dissolution has to be done properly to avoid future exposure to claims.

A. Non-compete agreements are generally not enforceable in California unless it is limited to the proper narrow exceptions provide under the law (such as protection of trade secrets). If not worded correctly, such agreements will not be enforceable and a business can risk losing its trade secrets or other intellectual property.

A. Yes. The firm handles disputes involving intellectual property licensing between individuals and companies such as the amount of royalties and the scope of license. Trade secret disputes, particularly in employment and joint-venture context. Trademark disputes involving the use of a business trade mark, name, logo, or design that creates consumer confusion with respect to the origin of such name, logo, or design. Patent disputes involving mostly patent infringement cases.

A. Not necessarily. You will be best served by consulting an attorney and being completely candid with him or her. The attorney will examine the facts of the case and see if the elements of fraud can be proven. Fraud is almost always pleaded in breach of contract cases, but that doesn’t mean that there has actually been any fraudulent conduct on either side of the contract.

A. Litigation cases can easily take 1-2 years if not more. Unless the parties decide to settle early, most cases don’t settle until the preliminary discovery stage is completed, which is generally a six to twelve month process.

A. A “win” for my clients is a result that is within the expected results set forth in the early consultations and within the range of the agreed-upon litigation budget.

In other words, if the client prevails, but the costs of litigation are financially devastating, I would not consider it a “win.” Similarly, if the costs of litigation are kept modest, but the outcome severely prejudices my client’s interests, that is not a “win.”

That is why an early meeting with counsel and a completely candid discussion of the expectations and the budget are so critical to establishing the right relationship with the right lawyer.

A. The attorney will examine the facts, weigh the evidence and evaluate your case and provide you with the most reasonable options to proceed. A good attorney should lay down all the options and explain the path for each, allowing the client to make an informed decision about the risks and rewards of the various options.

What you are paying for is the attorney’s time and experience in providing you with the advice necessary for you to find the option most favorable, then the time and experience to assist you in your chosen course of action.

A. Practical experience in a given area of law and ability to speak freely with the attorney are two of the most important elements in choosing an attorney in the business litigation field.

You should expect your attorney to be competent and diligent. If they are too busy and have to research everything you ask for, they’re probably not the best choice for resolving your issue.

A. If a letter demanding payment of a sum of money or threatening a course of conduct detrimental to the business or personal assets of anyone has been delivered, contacting an attorney early may head off a more complicated and more expensive situation in the future. While it is true than any individual in a lawsuit may represent himself or herself, a corporation or other business entity may not. So, if you or your business has been served, or even threatened, with a lawsuit, contact a business litigation lawyer to learn your options before deciding how to respond. You’ll be glad in the long run that you did.

For more information on Frequently Asked Business Litigation Questions, a free initial consultation is your next best step. Get the information, legal answers you’re seeking by calling comer.roy@gmail.com today.