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Businesses often have disputes arise from a number of situations. The dispute could be with an employee, business partner, customer or vendor, or another entity. When these disputes go beyond what a business can handle internally, litigation often becomes a course of action that a business owner must consider.
Litigation can consist of a breach of contract, a business divorce, a shareholder dispute, and everything in between. Litigation can also include lengthy and public court cases, expensive legal fees, and multiple parties. It is essential to prepare for litigation so that business owners are ready for the challenges they may face. One of the first steps is to consult and retain an experienced attorney early on in the process.
How else should business owners prepare for litigation?
Preserve Records and Evidence
It is crucial to maintain records since presenting evidence is a necessary part of litigation. Records include without limitation, contracts, electronic or physical paperwork, emails, direct messages, accountings, electronic data, and phone call records.
It is important that this evidence not be tampered with in any way. There may be consequences, such as fines and/or penalties, if any evidence—especially critical evidence—is destroyed or tampered with either directly or indirectly. In fact, you may receive or send a Litigation Hold Letter, which advises management and employees to preserve evidence. A Litigation Hold Letter can also serve to minimize liability later on if it is found that someone has destroyed or did not preserve evidence.
Aside from presenting evidence for your argument, during the discovery portion of litigation, litigants are typically required to provide case related documents to opposing parties. This includes without limitation the records mentioned above. It can also include documents from a third party, depending on the case. If any documents or pertinent information is destroyed—intentionally or unintentionally—then the company can potentially be subject to a number of court-ordered sanctions, including an adverse inference. An adverse inference allows a trial jury to presume that the destroyed information was damaging to your case, even if the information in reality was irrelevant and the destruction was innocent.
Avoid Creating Unnecessary Evidence
In most cases, the few documents you are required to turn over to the opposing party, the better. Newly created documents or records, including without limitation, emails or internal memoranda, may be required to be turned over in the discovery portion of a litigation. New documents may only serve to limit the positions or arguments you are able to make when the litigation begins. More particularly, any self-serving documents that are created can often fail in the context of evidence at trial.
It is certainly understandable that a business would want to resolve the dispute as efficiently as possible. Disputes can often disrupt routines and current or future business and therefore creates a desire to work things out.
However, it is important to avoid admitting any liability or fault as well as understanding the effect of your communication on the dispute. Under the rules of evidence in state and federal courts, anything you put into writing, including emails and text messages, could be used as evidence against you. Therefore, it is imperative that you be cautious of what you put in writing or even verbally say to other parties.
An experienced attorney can be your representation in any conversation or guide you in such communications, whether written or verbal.
If you are communicating with an opposing party, you want to keep it professional. Disputes can cause natural tensions and raise emotions between parties. However, it is important to keep your conversations civil and professional. Uncivilized communications can easily be taken out of context and can harm your case. To avoid this issue, keep any communication with an opposing party short and professional.
Similarly, you want to avoid aggressive statements against your opponent whether to a third party or publicly. Such statements could compound issues and cause increased claims or liability. For example, what might start out as a dispute over performance on a contract, could also lead to added claims of defamation or tortious interference depending on the situation.
Regularly Communicate with your Attorney
As discussed above, it is important to retain an experienced attorney early on in the dispute process. It is never too early to discuss a potential dispute with a trusted lawyer. This is not only to make sure you are protecting your rights but also to come up with a strategy that best suits your business’ needs.
The litigation process can be complex and lengthy, and developing a strong relationship with qualified counsel is imperative. It could be months or even years before a case is close if both sides do not come to a settlement agreement. An experienced attorney can provide support and work to achieve a better outcome for your case. It is important to keep in regular contact with your attorney to understand how your case is proceeding, provide information, and receive updates. When you use qualified counsel, you can count on their knowledge and skills to help navigate you through the litigation process.
Understand the Litigation Process and Attorney-Client Privilege
An experienced attorney can help you navigate the litigation process. Litigation generally proceeds through distinct stages: pre-suit investigations, pleadings, discovery, motions, trial, and possibly an appeal. Additionally, parties can voluntarily settle at any time during the litigation. In fact, most cases settle before reaching the trial stage. Further, arbitration or mediation, involving a neutral third party, can be another alternative to a trial in court.
Additionally, in most but not all instances, communications between an attorney and their client are privileged. This means the information will usually not be subject to disclosure and will not have to be shown or turned over to the opposing party. However, in order to rely on this privilege, it is important to understand it.
Attorney client privilege can be waived, and therefore lost, if (a) a third party is present during communications between an attorney and client, and (b) if written communications between an attorney and a client are later shown to third-parties. Further, not all communications between an attorney and client are privileged. For example, communications not pertaining to legal advice may not be covered.
There are many other distinctions to the attorney-client privilege that an experienced attorney can help you understand in order to best protect your rights in a litigation.
Check Your Insurance Policy and Prepare a Budget
Depending on the type of case, business owners may be required to inform or give notice to their insurers of any impending litigation as part of their policy requirements. It is important to review and understand your policy. In some instances, your insurance provider can disclaim coverage or deny indemnification if proper notification procedures were not followed.
Further, litigation can be expensive. If business owners do not adequately budget for a dispute, it could potentially lead to inadequate representation, an inability to assert a valid claim or effectively defend your business. Therefore, it is important to properly prepare and maintain a budget for litigation.
Litigation can be complex and challenging for business owners. It can pull focus from your day-to-day operations and growing your business. However, with the help of qualified counsel, you can save you valuable time in the long run and improve your overall results by taking practical steps to prepare. If you are involved in a dispute or litigation, consult an experienced attorney as soon as possible.
By: Molly Mauck, Esq., Romano Law PLLC