Boss Lady

Commercial litigation: 8 exampes of when it is required in business


You know that a lawyer can be an asset to your small business, but you are likely also concerned about racking up legal fees for things you can do yourself.

Many small businesses try to get by without the help of a lawyer, but this should not be the case when it comes to commercial litigation. There are many legal tasks you may be able to accomplish on your own, but this is not one of them.

On the other hand, you may do your business a disservice if you wait to seek legal advice until you are embroiled in a contentious lawsuit. When a dispute first appears, you may try to diffuse it on your own, but you could end up saying or doing things that hurt you in the long run.

When is commercial litigation needed?

It is possible to get by with the day-to-day operations of your business without a lawyer’s input. However, there are a number of situations where you should seriously consider contacting a lawyer. You can avoid many common legal mistakes in your business by consulting with a lawyer early on concerning the most important business issues.

1. You need to enforce a contract

Contract terms are subject to interpretation. If you have a disagreement with a vendor, customer, or any other individual, they will likely try to find loopholes in the contract that support their position.

There are also lots of legal defenses to breach of contract. For example, if you claim that a customer breached a contract by failing to pay you for goods you provided, they might respond that you breached first by providing incorrect items. Or they might claim that the contract was unenforceable because of something like fraud or mistake.

If someone has breached their contract with you, it is important to have a lawyer review the terms of the contract and advise you of your options. A lawyer will also give you more leverage in settlement negotiations. Sometimes just having a lawyer send a letter is enough to show someone you are serious about enforcing your rights and can get them to cooperate with you.

2. You need to defend yourself against a lawsuit

If you have been served with a complaint, it is important to contact a commercial litigation lawyer right away. You have a limited time to respond to legal pleadings, and if you don’t do so in the time allotted, you can lose your right to defend yourself.

Lawsuits against your business can be costly. If you lose, you could be on the hook for large sums of money. Further, legal issues concerning businesses can be complex. Commercial litigation attorneys understand both the substantive law and the procedures you need to follow. In commercial litigation, even small mistakes like missing important deadlines or not making appropriate disclosures can cause you to lose your case. Therefore, it’s essential to have an experienced lawyer looking out for your interests.

3. You need to resolve a partnership dispute

Despite your best intentions, disputes with a business partner can arise due to personal conflicts, poor decision-making, or disagreements about the direction of the business.

Many conflicts can be avoided if you consult a commercial litigation attorney at the time you form your partnership. You can head off many common partnership disputes with an agreement that outlines your relative responsibilities, dispute resolution procedures, and business goals. Your attorney can advise you on the specific terms you need for your individual circumstances.

Once a dispute arises, it is important to consult an attorney regarding how your partnership agreement or local and state laws apply to your situation. Your attorney can play an essential role in protecting your interests and those of your business.

4. You need to defend yourself in an administrative proceeding

Numerous state and federal regulations can affect the operation of your business. For many of these regulations, complaints are made first through administrative agencies. Your business may need to answer administrative complaints regarding things like:

  • Labor,
  • Marketing,
  • Harassment and discrimination,
  • Workplace safety,
  • Privacy, and
  • Disclosures

Your attorney can help you respond to complaints, gather evidence, and prepare for administrative hearings.

5. You need to protect your rights as a shareholder

If you are a shareholder in a business—particularly a minority shareholder—you depend on corporate officers to protect your interests. But when a company is being mismanaged, you may need to sue over things like:

  • Breach of fiduciary duty,
  • Failure to provide access to records,
  • Self-dealing,
  • Illegal or fraudulent action,
  • Misuse of corporate funds, or
  • Failure to pay dividends.

These issues can be complex and require the help of an experienced commercial litigation attorney.

6. You need to protect your intellectual property

When someone violates your intellectual property rights, it can be very costly to your business. A commercial litigation lawyer can help you with things like:

  • Former employees disclosing trade secrets or customer lists;
  • Someone using your trademarks without permission, or
  • Someone violating your copyrights or patents.

Trademarks, copyrights, patents, and trade secrets can be among a company’s most valuable commodities. If you do not take steps to enforce them, they can lose their value.

7. You are facing a class-action suit

Class-actions suits can be among the most expensive to litigate and settle. But not just anyone can pursue a class-action suit. First, the court must certify the class to permit the suit to go forward. A commercial litigation attorney is essential to helping you fight a class certification and to defend you if the suit goes forward.

8. You are setting up a new business

A commercial litigation attorney is indispensable if you want to start your business on the right foot. Your attorney can advise you on every aspect of your business, including:

  • Choosing a name;
  • Selecting a business structure;
  • Writing a business plan;
  • Applying for licenses and permits;
  • Drafting operating agreements;
  • Preparing an employee handbook;
  • Establishing policies and procedures; and
  • Drafting partnership, LLC, or shareholder agreements.

Many new businesses try to cut down on expenses by using online forms and standardized contracts pulled from the internet. Using online resources may save you money at first, but it can cost you in the long run.

Even if you prefer to do a lot of the legwork yourself, you should have an attorney review your business plan and start-up documents. Having effective and thorough agreements in place can go a long way toward preventing litigation down the road.

About Rebecca Wise'

Rebecca Wise is a business advisor who focuses on strategy and marketing as the key factors for success in today’s changing environment.

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