What Every Business Owner Should Know About Commercial Litigation
Commercial litigation is a very broad term, essentially meaning any legal procedure that seeks to resolve a business-related problem. It could be an issue between a business and its customer(s), vendors, competitors, other businesses, or even government entities.In today’s litigious environment, when lawsuits seem a first rather than last resort for working out disagreements, it is essential that a business have good legal representation. However, there are things that every business can do to protect and prepare itself. These measures can reduce the chances of being sued in the first place, and also position a firm in the best possible way for attaining a just resolution, in or out of court.The BasicsThe first thing to know is the degree of your company’s legal exposure. That is, a company making hand lotion has a slightly different set of concerns than a company in the service industry, say, an accounting consultancy. The manufacturer of the lotion, for example, must have product liability insurance, and may be called on to demonstrate that the appropriate government agencies approved the product formula for human use.The various areas in which business litigation can arise include, but are not limited to, the following:• Contract disputes, including breach of contract• Tortious interference with contracts or business relationships• Uniform Commercial Code (UCC) disputes• Shareholder and partnership disputes• Breach of fiduciary duty cases• Disputes over corporate management and control• Business dissolutions• Employment disputes• Disputes over non-compete agreements• Franchise disputes• Antitrust and trade actions• Consumer fraud and consumer protection issues• Debt collection actions• Civil RICO (Racketeer Influenced and Corrupt Organization) actionsAs a first line of defense, then, a company must employ thorough, well-documented filing systems. Keep every important document related to your business, in both electronic and hard-copy form, if possible.Good Records and Paper TrailsIn addition to keeping good, accessible records, every business owner should understand that honesty really is the best policy – in fact, it’s the only policy. It should be self-evident, but one very important ingredient in company success is integrity. This means that your company and its employees should be transparent, honest and ethical at all times.In addition to acting ethically, of course, it helps to have a record and paper trail of such honest dealings. Therefore, make it a point to save and archive all business correspondence, including internal communications such as e-mails, memos, meeting notes and so forth. Similarly, every single e-mail, receipt, letter or memorandum dealing with materials, manufacturing, customer credit, collections or anything else, from any department, needs to be saved.It does you no good to retain complete records if you cannot lay your hands on what you need, when you need it. Therefore, make sure you have a workable file system, competent administrative employees, and secure storage both online and off. You should have at least one, if not two, complete computer backups, with one kept offsite along with a photocopied set of onsite hard copy documents.Preparation is KeySince there is no telling what may happen in or to your business, you must be prepared in each and every area. As your company grows, you may find that, if you do a lot of government business, you need a “compliance officer” to keep you abreast of all the ins and outs of dealing with government agencies.In the same way, companies that generate an inordinate amount of paperwork for various reasons – chemical firms, public utilities, law firms, etc. – may find it a good idea to assign at least one employee full-time to records management and archiving. There is no better defensive strategy than being prepared for any eventuality.Don’t Wait Until It’s Too LateIf you do end up being sued, or deciding that you need to take legal action yourself, you do not want to be shopping around for a commercial litigator at the last minute. You need to have an established relationship with an attorney or legal firm, whether you have them on retainer or make some other arrangement.Make sure to interview a number of the leading commercial law firms and litigators in your area. You need someone whom you can trust, certainly, but also someone who understands your business niche, and your personal and professional needs. Having good legal help available is something that you should be considering at every point along your company’s growth path.As your company grows, you need to scale up your legal coverage the same way you scale up your insurance coverage. One of the most dangerous times for younger businesses is when growth starts outstripping the ability of the corporate infrastructure to support it – so plan ahead and follow your plan. Because one major lawsuit (from a tainted product or an employee injury) can threaten your company’s very existence, legal coverage is by no means optional or “a luxury.”“Risk reviews” should be a normal part of doing business, and should be done at least monthly if not more often. Everything that happens in every department is important from a legal standpoint, so train your department managers to stay aware of any situation that could expose the company to legal action. Whether it’s a leaky pipe in the ladies’ room or a theft from your loading dock area, anything that causes a loss of employees, work time or company property is putting your business at risk.With planning and foresight, you can be prepared for any legal eventuality and keep your business running smoothly. Good preparation – meaning that you save all company documents, regularly review risk procedures, and have commercial litigators on call – will see you through any potential challenge.