COMMERCIAL LITIGATION
The term "commercial litigation" includes
a broad spectrum of disputes stemming from business conduct. The notion
that an attorney who does commercial litigation spends most of his or
her time in the courtroom is a creation of Hollywood. Effective courtroom
representation requires extensive behind-the-scenes preparation. Commercial
litigators spend most of their time outside the courtroom reviewing
documents, taking depositions, preparing briefs, and counseling clients.
A commercial litigator is both an advocate and an advisor.
Some business people fail to understand the importance that the attorney
they retain play both of these roles. Commercial disputes can be time-consuming
and costly. A party should not casually initiate litigation. Usually,
too much money is at stake to allow emotions to rule over rational judgment.
A good commercial litigator should be able to inform his or her client
of the benefits and risks of taking a case to trial, and to act as an
advisor. The advocacy role should be saved for trial or for settlement
negotiations. When retaining a commercial litigator, business people
should keep in mind that the best litigator will be an advisor also.
While litigation has become a routine cost of doing
business for many companies in this country, litigation is not painless,
even for the party that eventually wins the lawsuit. However, it may
be necessary to file a lawsuit to resolve a dispute.
It is best to involve a lawyer in the early stages
of a business deal. Often, this may make it unnecessary to later try
to "fix" something that has gone wrong. Also, our legal system
has statutes of limitation that require a plaintiff to bring a lawsuit
within a set time or lose forever the right to do so. Different statutes
of limitation apply depending on the type of case, or the place where
it arises. They have different time periods and different events can
start the clock ticking.
How to Avoid Litigation
Most commercial litigators can offer advice on how
to avoid litigation. Usually, commercial litigators are not retained
until something has gone wrong, such as an overdue account, an angry
customer, or a deal has fallen through. A few relatively simple steps,
if taken early, can help avoid litigation.
1. Have an attorney draft forms and procedures. This
will assist you and your employees in business transactions. For example,
attorneys fees and costs are normally not recoverable from a customer
who fails to uphold his side of the bargain unless he agrees to it in
writing. This one simple provision may help resolve a dispute as well
as place the expense of a lawsuit on the person who breaches the agreement.
Another good example is a form can clarify as well as limit any warranties
of a product.
2. Use common sense. A business should learn about
a customer or potential business partner. Is the business involved in
numerous lawsuits? Does it pay its bills in a timely manner? It may
be too late to avoid the expense of commercial litigation once a business
relationship has been established.
3. Be able to "prove" the deal. While most
oral contracts are as enforceable as written contracts, the lack of
a written agreement or written correspondence may lead to a dispute
and ultimately litigation. Forms may be helpful as well as letters and
memos stating the terms of an agreement. It may come down to one persons
word against the other.
4. Use terms and language clearly. Usually the law
takes words very literally. Courts sometimes interpret unclear language
in a way the parties never intended. For example, if it is necessary
to fire an employee, the employee should know that he or she is being
terminated and should be told the legally permissible reason. An employee
told that he or she is being terminated because "things are not
working out" may infer an unlawful reason for the termination.
Another example is that if a customer's offer is unacceptable, the reply
to the offer should be clear -- "No, those terms are unacceptable.
I suggest the following terms . . . ." It is important for business
people to develop the habit of using language precisely.
5. Use caution and skepticism. Often times, commercial
disputes can be avoided if business people develop a more realistic
sense of reading people and the promises they make. One way to tell
the difference between a warranty and mere puffing is to ask if the
person making the claim is willing to put it into writing. It may be
best to do business with someone who makes a promise in writing and
is willing to stand by it. Be skeptical of promises and ask the person
to put it in writing.
6. Be careful about making promises that will be difficult
to keep. If a key employee leaves, the computer system goes down, a
supplier is hit by a labor strike or weather fouls things up, your company
may be unable to deliver what it promised. Is there a way out? Simple
language and terms in routine forms can prevent costly litigation.
7. Educate employees about company policies and operations.
While a president of a company may be thoroughly familiar with company
policies and operations, it does little good if an employee on the front
line dealing with customers does not. Customers upset with employees
often invite lawsuits. If employees are familiar with policies and operations
and the reasons for such policies and operations, they will treat customers
more appropriately and certainly make better witnesses if called upon
to testify in court.
8. Do not let emotions interfere with sound business
judgment. Good relations with customers are important. However, the
attitude of doing everything to avoid losing a sale is often emotionally
driven and not sound business judgment. Alternatively, sending derogatory
letters are an emotional response and may only inflame the situation
and ultimately hinder resolution of the problem. An attorney is able
to help a business see when emotions interfere with sound business judgment.
