20 Frequently Asked Questions About Business Litigation

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A basic understanding of business law benefits every business owner.

Without a fundamental knowledge of business law, small business owners can face devastating crises when placed in a precarious legal situation due to relatively simple matters.

Even the largest companies collectively lose and gain billions each year because of lawsuits and legal disputes. Many of which could be avoided with the right legal guidance.

As recent recipients of peer-reviewed industry awards in business litigation, we thought to compile a list of business law and litigation FAQs to share a quick method for owners and managers of businesses of all sizes, to learn the important facts of business law and litigation.

Business litigation is the process of taking a case involving business to court. Most such cases are disputes in regards to business transactions between individuals or business entities such as corporations. At their core, business disputes revolve around some form of contract (be it verbal, written form, or imposed business laws) which often arise during the sale of goods or services.

The short answer is, no. While people may assume that commercial litigation and business litigation are the same things, there are distinct differences between the two. Commercial law and business law do overlap in some aspects. However, business law is more general, covering most aspects of running a business, including formations, mergers, and dissolution of a company. Whereas commercial law is more narrow, focusing on employment contracts and the transaction of goods and services.

One key differentiator comes from a regulatory point of view. State and Federal governments regulate business law while commercial law is maintained by the Uniform Commercial Code at the State level.

Business litigation attorneys can help you establish the correct systems and paperwork according to state and federal regulations, reducing the risk of your company violating any business and commercials laws – which can be costly. Likewise, once established, having a skilled business litigation attorney on your side can recommend appropriate courses of action when legal problems and opportunities arise.

For example, when drafting contracts, your business litigation attorney can examine the paperwork to ensure the validity and enforceability of the agreement. At the same time, they can provide valuable guidance for improving legal documents for better protection and enforcement in your favor.

Legal cases can be highly disruptive to a business’ daily operation. Business litigation attorneys are highly experienced in such cases and can provide clarity and direction as per how to best handle such sensitive situations in a way which helps you and your business more time for focus on what’s important.

When picking a legal firm to work with, It’s essential you choose a team with the right skill sets. If you work with individual’s whose skillsets are too narrow, you could leave your company open to legal challenges from auxiliary sources. For example, if you hire a commercial litigation specialist, there’s a likelihood that they may not know broader Federal and State business laws for all areas of your business. Similarly, if you hire a general business lawyer without a specialized skill set, there’s a chance they may miss some of the finer details due to simply not knowing the law as deeply as others. For this reason, we recommend finding an experienced firm consisting of expert attorneys specializing in multiple areas of law.

For example, here at ZPLLP, we offer our clients a wide range of practice areas with experts lawyers in each field.

A typical example of s business litigation case is when a dispute arises between partners in a commercial agreement, such as the ownership rights of company assets or proceeds. In such cases, a business litigation attorney helps their client to establish their right to claim on the assets to improve the chances of successfully maintaining what is rightfully theirs.

The most common issue regarding business litigation is the breach of a contract for the purchase or sale of goods and services. A recent example of this at ZPLLP is when an insurance company failed to properly follow Florida law invalidating several clauses in the policy that permitted the insurance company to shortchange business owners who submitted hurricane claims.  In a class action suit against the insurer, ZPLLP was able to return 22.5 million dollars to business owners affected by this breach of contract.

That suing someone is a simple process. New clients often underestimate the process and costs involved with litigation as they do not realize the complexities of bringing a court case forth. Plus the emotional toll it can take on all those involved is significant particularly if the person does not have a skilled attorney.

Another misconception is that it is most convenient and cheap to hire a business litigation specialist after a crisis occurs. This is inaccurate. It is more challenging to find a good lawyer who can immediately understand your business and the issue at hand within a small enough time frame to act in your best interest. Hiring a business litigation lawyer early on to provide legal guidance may help prevent costly headaches in the future. Plus, if your lawyer already has taken the time to get to know you and your business, they will be able to help you quickly and efficiently in the event of an existential crisis.

Chronological records of the events that took place to bring you to the stage at which you wish to pursue litigation are most helpful for an attorney trying to build your case. Try to create a step by step detail of what has taken place and bring with copies of supporting documents such as contracts, letters, and emails, chat messages or phone records with you when seeking help from an attorney.

Although it may be cumbersome and costly to collect this information and have it reviewed by a lawyer, this information and investment will support your case, increasing your chances of a favorable outcome which will save you in the long run.

One of the most common mistakes investors and business owners make, which lead to business litigation is that they fail to communicate party obligations clearly and unambiguously in writing. This can happen when business owners and investors assume personal relationships will not change over the course of a business’ lifespan.

Another mistake is when they fail to have an attorney prepare, or at least review, legal agreements used in their business. Business owners could avoid future costly court cases if a trained business litigation lawyer were to draft their contract terms, reducing the risk of disputes.

Finally, new clients frequently come to us with dispute cases but who have failed to preserve crucial documents related to their business or a transaction made. Unfortunately, a lack of written evidence puts the client in a precarious situation as they are less able to support their claims.

Yes. It would help if you drafted a memorandum of understanding between all parties to avoid potential disputes as assets and liabilities change and increase. It would be wise to specify each party’s obligations and ownership rights in writing.

Here are the agreements we recommend any business owner draft: a shareholder agreement, operating agreement, partnership agreement, plus any joint venture or investor agreements if applicable. Having these agreements in writing can save you and your partners from potential crises down the line.

Short answer, yes. However, your best course of action and legal rights depend on your relationship to the business. I.e., are you an employee, shareholder, co-founder?

Overall, if you feel that something illegal or unethical has happened in your company which could jeopardize your employment, rights or assets, it would be a good idea to consult with a legal specialist to discuss your situation.

A business law specialist can review the obligations, assets, and liabilities of each party involved in a business and take measures to avoid future disputes or issues between partners and stakeholders.

Dissolving a company is often more complicated than first presumed. This is particularly true when multiple parties have personal assets and debts connected to the business. Simply dissolving a business entity does not release all parties from on-going liabilities and obligations. A skilled attorney can help avoid future disputes or issues.

A trade secret does not provide your company with exclusive rights or exclude third parties from making commercial use of it. With the assistance of a business litigation specialist, you can enforce certain protections under the Uniform Trade Secrets Act (UTSA) to better secure sensitive formulas, operational practices, methods, techniques and company processes from theft, disclosure, and misappropriation.

Trade secrets are often mishandled or disclosed by employees, vendors, or third parties such as contractors. A business lawyer can help protect your trade secrets by drafting NDA’ and non-disclosure agreements, and Non-compete agreements. In addition to enforcing such agreements through swift and proper litigation.

Yes. ZPLLP has experience handling cases surrounding Intellectual property law. Our attorneys have resolved disputes involving intellectual property licensing between corporate entities and individuals such as Trade secret issues, Trademark misuse (such as copying a logo or business trademark) and patent infringement cases.

Litigation cases often take anywhere between 12-24 months, sometimes longer. However, if parties decide to settle, it can be quicker, between 6 to 12 months. This is how long it generally takes for proper preliminary discovery.

A Business Litigation “win” for our clients is when we attain a favorable result according to expectations outlined in early consultations, within the constraints of the agreed-upon litigation budget.

For example, if our client succeeds in the courtroom, but the process of litigation cost more than the client had budgeted for, we would not consider this a “win” for our client. Likewise, if we can remain within budget, but the outcome of the litigation is not favorable to my client’s interests, that wouldn’t be “win” either.

This is why we at ZPLLP place great importance on conducting immersive early meetings between the client and attorneys to attain a clear consensus of expectations and budget.

Your business litigation attorney will examine all the facts at hand, weigh the evidence, and evaluate your case for you. From this, they will provide you guidance regarding the path forward. A skilled and competent business litigation attorney will explain all the options the client has in their situation, allowing the client to choose which option Is in their best interest depending on the particular risks and rewards.

When hiring a business litigation attorney, you’re paying for the attorney’s experience and in-depth legal knowledge of the situation you’re facing to guide you to find the most favorable course of action.

Always look for an attorney with a proven track record of diligence and competency. When considering an attorney to work for your business, ask for past successful litigation cases as well as industry awards and accolades. For example, three of ZPLLP’s attorneys were awarded national Super lawyer status, an industry acknowledgment attained by only the top 5% of lawyers across the US. Awards such as the peer-reviewed Super Lawyer award help you to quickly know which attorneys have the highest levels of skill and past success helping clients.

A breach of contract is when there is a failure, without a due legal reason, to deliver upon a promise that forms either part of or an entire legal agreement. An example of such a breach could be if someone did not perform a service that met industry standards. Another example would be if an employee or contractor refused to perform their job as agreed.

Whatever the case, there are five steps to take:

  1. Verify that a formal contract existed.
  2. Confirm that indeed the contract was explicitly broken.
  3. Confirm that there was a loss incurred due to the breach.
  4. Verify that the defendant was responsible for the loss.
  5. Collect the evidence obtained in step 1-4 and contact your lawyer.

There are multiple remedies for a breach of contract, all of which aim to place you, the plaintiff, in a position in which you do not suffer loss form said breach.

Yes. When a third party intentionally forces or induces someone to breach a contract is legally referred to as Tortious interference. In this case, there are two potential victims placed at risk of suffering losses. Firstly, the party induced or forced to break their contract, and other parties bound to the agreement who missed out on a benefit from the deal because of the breach or suffered a loss due to the violation.

If you have experienced a monetary loss due to a third party interfering with contacts you were bound by, you may pursue the interfering party for damages accrued. Contact us to discuss your situation

In short, yes, certainly. It is what is known as a supplier dispute. Generally speaking, if your business suffered a loss due to receiving the wrong products or inferior quality goods; or if the products arrived late causing your business damage, you may be entitled to compensation for your business loss.

For more information, or if you have a question you would like answered in our Frequently Asked Business Litigation Questions, let us know. Contact us for all your business litigation needs at (877) 713-7966 today.

Jordan A. Shaw20 Frequently Asked Questions About Business Litigation

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