The Necessity Of Avoiding Litigation In Business Disputes

Prevention is actually better than a cure. Although business disputes are often litigated, the process of litigation can be excessively expensive and can lead to dire consequences such as bankruptcy. Trying to prevail in the litigation process consumes the time and energy which would otherwise have been devoted to running and furthering a business. In the business world, dealing with lawsuits has a potentially detrimental effect on your business reputation which every businessman cherishes as their most prized intangible business asset. However, if you believe that you are in the right and litigation is imminent, you should not back down from the fight. An experienced business attorney will always advise their clients to exhaust all other avenues prior to proceeding to litigation.

An important point to bear in mind in regards to resolution of business disputes is structuring your business in such a way that your important assets are protected. Running a business as a sole proprietor is a perilous proposition at best because then your personal assets are vulnerable to attack from your business creditors. This is seldom a risk that you would want to take. Some businesses are based on informal partnerships where rights and responsibilities are not thoroughly described as they are in a formal partnership agreement. This is just as bad as a sole proprietorship. You can be held liable for the misdeeds committed by your business partner even if you were unaware of any misdeed being committed. Businesses that are structured as LLCs or S corporations are a much better proposition depending on the risk factors associated with the business and any potential tax liabilities involved.

Seasoned and experienced businesspeople may even go a step farther and structure their business into several entities as a strategy to protect important assets like intellectual property or real estate from creditors or any other potential risk. Such people are also farsighted enough to incorporate an exit strategy into their business plan. The way that you structure your business enables you and any potential partners that you have to leave the business on terms that have already been predetermined in their business plan. As stated before, due to the time and costs involved, any parties engaged in business disputes should expend all efforts to avoid litigation of the dispute. Some factors which can be helpful in avoiding business litigation are stated below:

  • It is imperative to have an unbiased understanding of the business dispute by objectively gathering all pertinent facts and available documentation as soon as possible.
  • You should determine your stance in the disputes based on the objective facts that have been gathered rather than any emotional impulse that you might be feeling. Your stance should clearly illustrate what you are entitled to and the reason why your stance should be favored.
  • As the old saying goes, keep your friends close but your enemies closer. It is critical that you also have an understanding of your adversary’s stance in the dispute. It would be even more prudent if you can somehow document their stance such as having it in writing.
  • Never hesitate to communicate with your adversary in a business dispute.
  • It is extremely important to have and maintain an objective standpoint in the dispute and not let emotions get involved. The majority of business disputes are generally financial issues that need to be worked out. Trying to deal with it as a moral issue can only do more harm than good.
  • It is also prudent to involve experts in determining what the issues are after the field of expertise involved is determined. For instance, an experienced business lawyer is best suited to analyze any legal issues pertaining to a business. Hiring an expert portrays that you have strived to obtain an objective and unbiased analysis of your business dispute. An expert will not tell you what you want to hear rather they will provide an objective judgment based on the facts pertinent to your case and may provide the best possible avenue for you to deal with the issue and avoid litigation.
  • If the main issue in the dispute is contractual in nature, it can really help to have complete familiarity with the terms of the contract and how it affects your business relationship with your adversary. If you have any questions or queries regarding the contract it can be helpful to consult an experienced business law attorney who can review the contract and render their opinions on any queries that you may have. It is also critical to ensure that you are in compliance with the provisions of the contract namely notice requirements, pre-designated strategies for dispute resolution and any similar provisions.
  • Let your adversary know that you wish to avoid litigation and propose an amicable settlement. Even though, your settlement offer may be rejected, your adversary is made aware of your resolve to avoid turning this dispute into a contentious issue. Moreover, your adversary may have a similar resolution in their mind which might be acceptable to you.
  • It is imperative to calculate the costs, time and risk involved in litigation of business disputes. Usually, the least expensive aspect of being involved in a lawsuit is the lawyer’s fee. This gives you a basic idea of what it means to litigate a business dispute cost wise. The major expenses involve the time spent in pursuing a lawsuit. That is time which could have been spent for productive purposes but now has been uselessly expended in the litigation process. Litigation generally takes a huge amount of time and is not readily resolved especially in a business dispute. Parties involved in a business dispute generally spend 4 or more years in litigation or associated proceedings. This long period of time can be attributed to factors such as postponements, appeals, counter appeals etc.

After having determined the facts, the legalities involved and the required expert opinions, it is necessary to meet with your adversary or a representative thereof for the purposes of discussing your dispute and reaching a mutually acceptable resolution. You can thoroughly explore the issues of the dispute at the negotiation session and discuss the risks associated for both parties in litigating the dispute. Also discuss the effect such litigation may have on your reputation, bonding capacity and future business prospects along with other consequences that may impact both you and your adversary in the dispute.

Author Bio:

For over 25 years, Barry A. Feinstein & Affiliates have successfully handled all types of personal injury and wrongful death claims throughout Massachusetts auto accident lawyer.

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