If you are in business long enough it is likely you will eventually face a dispute with a customer, employee or another business.  Are you prepared to face the challenge?

Anthony Zaller of the California Labor and Employment Law Blog provides some Tips on Litigation that expand on the sage advice from Sun Microsystems general counsel, Mike Dillon.  Here are the key strategies discussed:

  1. Litigate only when you have an important interest to protect.  Litigation is costly.  Very costly.  Many businesses may consider the cost of legal fees and other expenses but forget about the diversion of employee resources.  Time spent preparing for litigation is time spent away from the business.
  2. A non-judical resolution is almost always preferable.  You lose control whether you go to the judge, jury or arbitrator.  Consider mediation as an alternative.
  3. Litigate when you have a high degree of confidence you will prevail.  Bluffing is for weekend games of Texas Hold’em.  You need to carefully evaluate all aspects of the case when you file suit to ensure a favorable outcome.
  4. You litigate to win.  This means your board, management and employees fully support the decision to litigate and are willing to commit the resources necessary (time and expense) required to prevail.  It also means hiring seasoned litigation counsel that understands your business and objectives.

Zaller makes a great point that businesses should hire legal counsel BEFORE trouble occurs to develop and implement policies that 1) comply with the law and 2) assist the company when a lawsuit is filed.  He points out that No. 2 is important because not only do you need to comply with the law but you also need PROOF that you comply with the law.

I also agree wholeheartedly with Dillon’s commentary regarding litigation:

… it’s important to remember that litigation is just a tool. And, as with all tools, it is effective only when used dispassionately, in the right way and for the right reasons.

I often hear business owners and individuals say they want to pursue or defend a case because of the principle of the matter.  This initial emotional reaction tends to disappear after legal fees mount and resources are diverted from the actual operation of the business.  Win or lose, business owners rarely enjoy litigation.  Like Dillon, I encourage you to approach litigation dispassionately and consider the best business approach to ending your dispute.  Sometimes the best business approach means litigation is necessary but only after you have carefully evaluated all aspects of your case to determine how to prevail, or at the very least, extract yourself from the litigation under the most favorable settlement terms.