As a business owner, there’s no shortage of tough decisions coming your way. One of the most challenging choices for business owners is deciding when it’s time to pursue legal action against someone harming your company. Whether you’re interested in suing someone for defaming your company, infringing on your intellectual property, or failing to follow through on a contract, there are several things to consider when deciding if a lawsuit is the right choice. Consider these factors in consultation with your business lawyer.
1. What Are Your Damages?
Think about how much you stand to gain from a lawsuit. Remember that the goal of the court is to make damaged entities whole. If your business has suffered minor damages or it’s difficult to substantiate your damages, consider whether or not a lawsuit is worth the time, stress, and money.
With your business attorney, you can take a long, hard look at the actual damages your business has sustained. Except in a situation where you’re only seeking injunctive relief (meaning, you want to make someone do something, or stop them from doing something), for a lawsuit to be successful, your business must have suffered actual financial damages, such as lost income due to a customer’s failure to pay for services rendered. With this figure, your attorney can help you realistically assess how much you stand to gain if you prevail in court, or convince the defendant to settle prior to a trial.
2. Collecting Damages.
Getting a judgment is one thing—collecting on it is another. If the defendant has few or no assets, you may be unable to collect the money you’re owed. This is another reason it’s important to have an attorney on your side; your attorney can investigate the person you want to sue and find out if they’re “judgment- proof”. And remember, even if you get a judgment, a debtor could declare bankruptcy.
3. Locating the Person You Want to Sue.
Consider how easy (or difficult) it is to locate the person you want to sue. If someone doesn’t have a permanent address, or you don’t know where they live or work, having a complaint served on them can be difficult. Process servers may charge for each failed attempt, quickly cutting into any potential compensation you stand to gain from the lawsuit.
4. Where Must You File the Lawsuit?
If the venue is inconvenient, such as in California when you and your business are in Florida, the cost and time involved will increase.
5. Cost of Litigation.
Consider the financial cost of litigation. The cost of litigation can be extremely difficult to measure because the estimates are based on studies and survey and many attorneys decline to participate, not to mention, it varies based on individual situations. Cases that resolve shortly after a case has been initiated can settle for as low as a couple thousand dollars to over $10,000.00 (per side). Cases that take longer to resolve can cost up to hundreds of thousands of dollars, if not millions – depending on the individual case. Additionally, the cost of litigation takes into account the hourly rate of any attorneys involved, the hourly rate of any support staff involved, filing fees, the cost of expert witnesses should there be a need, and so much more. While you may be able to recover reasonable attorneys’ fees and costs should you prevail, that is often not the reality. Thus, you have to weigh the risk of being unable to recover your costs, and being forced to pay the other party’s reasonable attorneys’ fees and costs should they prevail.
6. Preventing Ongoing Damage.
Even if you’re unable to collect on a judgment, a lawsuit may be worth it if it allows you to stop ongoing damage to your business. In some cases, you must take legal action to avoid issues down the road. For example, failing to protect your trademark can eventually cause you to lose your trademark. For that reason, you must bring a legal action against someone illegally using your trademark. Furthermore, a judgment can show the offending party that there are consequences for their actions and cause them to stop slandering your business, failing to deliver on contractual obligations, violating a non-compete, or otherwise harming your company.
Lawsuits are inevitable in business ownership, but you shouldn’t go through it alone.
You need passionate, dedicated legal counsel on your side.
Call Hunter Business Law at (813) 867-2640 to discuss your legal options.
This blog was written by Hunter Business Law Attorney Adam Hersh.
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