Handling business operations is a lot of work. Apart from everything else, it requires strict compliance with various aspects such as enforced contracts, the set legal strategy, and the internal rules of the business. Failure to do so could result in disputes requiring resolution through business litigation. A business dispute could arise due to workplace disagreements, allegations of harassment, product failures, or poorly written contracts.
If your business faces a serious dispute that could lead to litigation, you must ensure you have legally protected yourself. A business litigation attorney should be the first person to contact to guarantee maximum protection. The attorney can investigate the allegations against your business, bring an insurance claim, mount a solid defense, and strategize to fight for a settlement. Similarly, if you wish to initiate a litigation process against a business, you need help from an attorney.
At the Los Angeles Business & Real Estate Law Firm, we boast highly experienced business attorneys who help clients achieve the best possible outcome for disputes affecting their businesses while protecting their rights. We work to resolve business conflicts quickly and efficiently in our client’s best interests. And if litigation arises, we will analyze and vet each case thoroughly before determining the best strategy to maximize recovery. Call us today to learn more about how we can help you.
What Is Business Litigation?
Like individuals, businesses also face a wide range of disputes. Lawsuits against or by a company can arise from customers, competitors, employees, government agencies, or outside third parties such as suppliers or vendors. When a business conflict cannot be resolved internally, a company may resort to business litigation to solve matters in court.
Business litigation is also called “commercial litigation.” It is a specialization in business law that involves resolving or defending legal disputes arising from business-related transactions. In most cases, the term “business litigation” is used to describe the handling of defense for businesses accused of any misconduct. However, it can also describe handling claims of companies suing for misconduct.
Litigation refers to the process whereby a dispute is resolved in court or through an alternative dispute resolution method. Sometimes business disputes cannot be resolved through arbitration or negotiation proceedings; when this happens, they are subjected to litigation.
Generally, business litigation falls under civil law and not criminal law. Civil cases arise when a business or person sues another company or person to resolve a dispute. On the other hand, criminal cases entail the government filing charges against an individual or business for breaking the law.
Civil cases that involve businesses are usually a matter of one party filing a lawsuit against another to protect or enforce their rights. However, this comes in various forms, from a business filing a suit against another for violating intellectual property rights to a worker suing a company for unlawful labor practices.
As implied above, a business can be either a defendant or a plaintiff in a litigation process. Both of these roles have different responsibilities. If the business is a defendant, the owner should talk to an attorney to ensure they understand the process and to know what documents and records the business may be lawfully required to retain. Sometimes, if a business fails to keep records, a judge may direct the jury to assume the missing documents were harmful to the business’s case, even if they were not. And as a plaintiff, the business owner should understand who can sue on the business’s behalf and when the company itself can be a plaintiff.
An example of a business being the plaintiff is when a shareholder files a lawsuit on the company’s behalf against an officer or director for breach of fiduciary duty. A company can also sue an individual for breach of contract. An example of a business being a defendant is when a shareholder sues a business directly for the harm they incurred because of the business’s, an officer’s, or a director’s actions.
A business can also be sued for employment-related reasons. Employment law is a broad topic. However, an employee can sue a company for discrimination. Or a business may be sued for employee misconduct under the vicarious liability theory.
Types of Issues Requiring Business Litigation
Business litigation is significantly varied and highly complex and technical. Common issues and cases that require business litigation include the following:
Partnership Disputes
When a disagreement arises between partners in a business partnership, it can jeopardize the viability of the business itself. A skilled business litigator can assist the partners in resolving partnership disputes and saving the company. If that is impossible, the litigator can ensure the partners adhere to the business agreement and take the necessary steps to dissolve the partnership without going through costly litigation.
Trade Secret Disputes
Statutes protecting a company’s trade secrets protect companies against the illegal commercial utilization by other businesses of commercial and technological information. The policy supporting trade secret protections encourages development and research by safeguarding the originator of business information.
Also, protecting trade secrets aims to maintain and encourage business ethics standards. Note that trade secret protection does not give the owner of the trade secret exclusive rights to the information. It only guards a person against the illegal use or acquisition of that information by another party. A person can discover your trade secrets through fair means.
Fraud
Fraud cases in business litigation often include allegations of breach of fiduciary duty. An instance of a fraud case is when a plaintiff accuses a bank investment manager of investing their (the plaintiff’s) money in a business controlled by the bank. A bank investment manager has the legal duty to notify the bank’s clients of any conflict of interest and then waive that conflict or transfer their money to a different manager.
If a client experiences financial loss due to the actions of a bank’s investment manager and is not permitted to transfer funds to a different manager, the client may claim the investment manager or the bank was involved in self-dealing and neglected to act in the best interests of the bank’s clients.
Breach of Fiduciary Duty
Litigation may occur when a business shareholder accuses one or more company directors of breaching their fiduciary duty to them. Based on how broadly held corporate stock shares are, the case may involve more than one plaintiff. In some instances, the plaintiffs may be so many that the case may turn into a class-action lawsuit. Class action lawsuits involve unique litigation procedures requiring the appointment of a class representative.
Breach of Contract
Business litigation may arise when a party claims that another party failed to adhere to the terms of a business contract. The contract may be for the sale of goods, or the dispute may be about a real estate construction project. These are specialized areas of law requiring knowledgeable legal assistance.
Intellectual Property Disputes
Intellectual property rights (IPR) are defined as creative expressions, inventions, and ideas based upon which there is a willingness to bestow the status of a property. Intellectual property rights provide exclusive legal rights to the creators or inventors of a property to protect their creation or invention for a given period and receive payment for their work. There are various types of intellectual property protection, for example, patents, publicity rights, copyrights, and trademarks.
Usually, a commercial litigator will check to ensure that a company has received all the rights to its property. But they can also represent companies in litigation for intellectual property infringement or other matters. These cases are often complex, especially when dealing with patents. Consequently, a business should retain an experienced litigator to handle intellectual property matters.
Employment Disputes
Employment-related issues can also result in disputes requiring litigation. Employment disputes usually need a specialized business attorney since they can be split into smaller sub-categories that form a larger category of law in themselves. These disputes may include wrongful termination, wage disputes, Family and Medical Leave Act (FMLA) disputes, and discrimination and harassment lawsuits.
Employment disputes usually involve the application of state and federal employment statutes. Therefore, business litigators handling employment disputes must have in-depth knowledge and experience in both business and employment laws. These claims could be pursued through agencies, which would have different regulations and procedures than litigation in state court. A business litigation lawyer will keep the business on track as they tackle an employment lawsuit.
Consumer Litigation
If a business involves itself in misconduct concerning its products, the customer of that business may sue it. The lawsuit could be dependent on the sale of defective products or a breach of a warranty. If the company did break the law in any way, its competitors, customers, or other parties hurt by its unlawful activity might sue it. The company will require a business litigation lawyer to defend it against the lawsuits, pursue other available remedies, and represent its responsibilities and rights.
Professional Negligence
When a business professional, such as a licensed contractor or real estate professional, acts negligently, it could result in a professional negligence claim. Occasionally, business litigation lawyers have to defend individuals or their companies against claims arising from damages supposedly caused by their professional misconduct or mistakes.
The Litigation Procedure
A litigant has to follow various steps when seeking to resolve a dispute through the judicial system. The litigation process is relatively uniform and is regulated by state or federal court rules. It involves much work, whether the case proceeds to trial or not. The process ranges from filing an initial pleading like a complaint, bringing subsequent pleadings like a response, a possible counterclaim, or a third-party action, to appealing the case if the judge’s ruling is dissatisfying.
The step-by-step procedure for business litigation is as follows:
- Filing an initial pleading and a response
- Motion filings to request a judge to do something, such as allowing specific evidence
- The discovery phase, which includes interrogatories and depositions
- The pretrial conference to plan how the court trial will move forward
- Trial
- Judgment y the judge or jury
- Appeals
Usually, litigation takes one or several years, although most cases do not reach the trial stage. They settle out of court.
A business owner should know about small claims courts. A small-claims court is a more informal court dealing with minor suits about everything from minor finance disputes to nuisance charges. The eligibility of small claims courts varies from one jurisdiction to another. It is generally the first place a litigant goes when a business faces a problem involving minor monetary damages.
Recoverable Damages In Business Litigation
There are various damages a plaintiff in business litigation can recover with help from a business litigation attorney. In virtually all cases, these damages are meant to make the plaintiff whole if the court finds that the defendant indeed wronged them. The amount and type of damages awarded to a business litigation plaintiff vary based on the facts surrounding the subject matter.
Common damages granted in business litigation include the following:
- Liquidated damages— contracts sometimes mention what amount of money every party should pay if either fails to honor the terms of the agreement. Liquidated damages are monetary damages awarded depending on the terms of the contract that was breached. If liquidated damages do not show actual damages, the judge will instead grant a different and more accurate kind of monetary compensation.
- Compensatory damages— they are damages meant to make the complaint whole by placing them in the same financial situation as though the loss never occurred. They cover any actual, provable loss. Damages granted may include what the complaint lost from profits and incomes.
- Restitution damages— this type of compensation is sometimes granted in breach of contract cases when promised benefits are not delivered. The complaint recovers damages for the value of what the accused received while waiting for them (the accused) to honor the contracted promises.
- Reliance damages— if the loss is more challenging to define in monetary terms, the plaintiff recovers reliance damages. Reliance compensation covers instances where the accused neglected to act on an obligation or when the plaintiff detrimentally relied on the defendant’s misrepresentations.
- Punitive damages— sometimes, a plaintiff can recover punitive damages when an accused has engaged in intentional activity against them (the plaintiff) to inflict harm.
Avoiding Business Litigation
Being savvy means paying attention to every detail while operating a business. Having legal counsel prevents stress and saves time and money. Hiring an experienced lawyer allows a company to avoid future litigation by minimizing the risk sooner rather than later.
Having employment agreements is crucial when hiring employees for your business. Navigating all the federal and state laws and regulations can be challenging. Remaining current on legal matters when operating a company is crucial to reducing the chances of litigation.
Hiring an experienced business lawyer for legal counsel can help prevent unnecessary fines resulting from compliance negligence, employee lawsuits, and contractual disagreements. To increase the chances of avoiding business litigation, be conscious of these factors that are frequently at the center of a dispute:
- When signing an agreement with another business, ensure you understand everything you agreed upon before signing
- When contracting with a vendor, be specific about everybody’s responsibilities under it
- Trademark your business to identify it and prevent another party from offering similar products or services confusingly like yours.
- Choose the correct entity for your business
Alternative Dispute Resolution
Alternative dispute resolution is an alternative to litigation that includes mediation and arbitration. Not all business disputes need to be taken to court. Business litigators understand that the least expensive way of fairly resolving a conflict is by submitting it to arbitration or mediation.
In arbitration, an arbitrator passes judgment on the dispute after listening to both parties involved. The arbitration process is less formal than a court trial. Generally, the process is cheaper and has fewer formal procedural rules, but it has limitations that litigation does not have.
In mediation, a neutral third party acts as a go-between to guide the parties toward a settlement. The party hears both parties in a dispute and then tries to resolve the conflict through mutual compromise. The mediation process is more informal than arbitration.
In either mediation or arbitration, the neutral third party is usually an expert on the subject forming the dispute, like labor and employment, securities law, banking, insurance, or construction. Businesses use these conflict resolution methods to save time, minimize costs, and avoid litigation.
Contact an Experienced Business Litigation Lawyer Near Me
Business disputes can be intricate and expensive if not correctly addressed. You need a skilled business litigation lawyer to assist you in resolving it in a manner that makes business sense. At the Los Angeles Business & Real Estate Law Firm, we strive to resolve business disputes as expeditiously as possible. We provide aggressive legal representation both outside of court and in the courtroom, while applying strategies that can achieve an efficient resolution.
And as we work to resolve the dispute efficiently, we also work to minimize the effect of the conflict on the business’s operations. To schedule a consultation with one of our expert business litigation lawyers, call us at 310-796-7794. Our lawyers can assist you in obtaining an exceptional outcome when you need it the most.
