KNOWING WHEN YOUR BUSINESS SHOULD PURSUE LITIGATION
March 9, 2022
Operating a business is not always a walk in the park. All kinds of challenges, setbacks, and disputes can arise. Competition can be fierce, and tactics deployed by competitors can border on the illegal. You can fight back, or even negotiate with others who are attempting to bring you down, but the question always looms: When is the right time to sue?
Legal action is available in many situations—breach of contract, theft of intellectual property, unfair business practices, and tortious interference—but at what point does it make sense to take matters to court, with the prospect of lengthy and potentially costly proceedings?
If your business is facing potential litigation—whether you’re being sued, or you’re seeking to pursue a lawsuit against another business—contact the Law Offices of David H. Schwartz, INC.
Attorney David Schwartz has proudly served businesses in and around the Greater San Francisco Bay Area for more than 45 years. Whatever the situation, he will listen to your story, assess what’s going on, and advise you of your best options for resolving your issue. He is prepared to pursue matters in court to help you and your business move forward.
Issues That Could Lead to Litigation
If you’re in business, you not only have to please various stakeholders—customers, contractors, suppliers, employees, investors, creditors—but you also have to watch your back for what competitors may do. They can steal your trade secrets, employ unfair business practices, or otherwise interfere in your operations. Meanwhile, contractors and employees can breach their agreements with you and cause your business to hit the pause button.
One frequent cause of business disputes that can result in litigation is a breach of contract. Most businesses find themselves relying on contractual arrangements for the supply of products or services. If one of your suppliers fails to deliver as promised and it causes damages to your business—loss of revenue or other economic loss—a breach of contract lawsuit is always an option if matters cannot be settled out of court.
Another area that can result in legal action is the use of unfair business practices by a competitor. California has a law on the books to protect businesses against such practices, which include false advertising, conspiracy to “fix” market prices, monopolization, price discrimination, and conspiracy to allocate markets or customers.
Additionally, tortious interference can halt your business in its tracks. The two most common types of tortious interference are interference with a prospective contractual arrangement (IWCR) and interference with a prospective economic advantage (IWPEA). Contractual interference can take the form of stepping in between your business and one of your contractors. If there is no contract, then interference with your business operations can fall under IWPEA.
The theft of trade secrets and intellectual property is another area that could lead to litigation. Here, a company may lure a former employee into sharing a trade secret that you’ve been carefully guarding.
California has adopted the Uniform Trade Secrets Act to protect against misappropriation of trade secrets, including customer lists, sensitive marketing information, unpatented inventions, software, formulas and recipes, techniques, processes, and other business information that provides a company with a business edge.
Considerations on Initiating a Lawsuit
Let’s be practical: it’s occasionally the case that pursuing action in court can cost more in time lost from running your business and in various fees than you can get in a court award. In this case, you may want to start with negotiations to reach a settlement out of court.
In general, the decision to file a business lawsuit hinges on five considerations:
Cost-Benefit Analysis. Is a lawsuit even worth the costs involved? If you’ve suffered a minor breach of contract that didn’t result in huge economic damages, and you’ve been able to find another provider of the services or products, then it may not be worth the expenditures in time, energy, and money. If it was a major breach and your losses were significant, then a lawsuit could be the answer.
All Alternative Methods Have Been Exhausted. This refers to negotiations, mediation, or arbitration. The party who has caused you damages may or may not agree to anything after negotiations, or may even reject negotiations. Until these avenues have been pursued and found lacking, it might not be in your interest to pursue a lawsuit.
You Have a Strong Case. Going to court is no guarantee of victory, so you want to make sure you have a solid case against the other party. Your business litigation attorney can help you evaluate the evidence you have before proceeding to file a lawsuit.
Publicity Doesn’t Worry You. Courtroom proceedings are open to public scrutiny, and the case can even result in media coverage. The proceedings also create a public record that others can view at any time, even years later.
You'll Be Able To Recover Financially. Even if you win a judgment in court, if the other party lacks the resources to honor the monetary compensation awarded to you, it may have all been in vain, unless your goal was simply to put the other party out of business.
The Power of Skilled Advocacy
Business disputes can be complex and tricky, and proving you’ve been wronged by another party can be challenging. Your best recourse is to have an attorney experienced in business litigation advise and guide you on every step once you suspect another party, or parties, are threatening your ongoing operations.
If your business is in the Greater San Francisco Area, including Santa Clara, San Jose, San Mateo, Oakland, and Alameda County, contact the Law Offices of David H. Schwartz, INC. immediately. For over four decades, Attorney David Schwartz has helped businesses on a one-on-one basis. Your case will not be shuttled between attorneys or paralegals. He will provide you with personalized service and help you reach the best resolution possible.