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When Is Litigation Necessary to Resolve Business Disputes?
By Litigation refers to the activities and procedures of filing and prosecuting a court case. In civil cases, litigation involves a plaintiff seeking redress (compensation) from a defendant. A business can be included in all kinds of commercial litigation, but due to the cost of civil litigation, many businesses instead opt for mediation or arbitration. Business owners are understandably reluctant to engage in costly and possibly brand-damaging legal cases. However, there are instances where civil litigation is unavoidable. The decision to pursue litigation should always be made with the help of a knowledgeable attorney, and a business owner should consider all the relevant factors present in their potential case.
1. Is it Worth The Cost?
Any good business owner spends their money wisely. Litigation can be costly and time-consuming. A plaintiff may spend years in court pursuing a lawsuit, and much of an award resulting from a favorable verdict or settlement may go towards court costs, defeating the purpose of their claim. In other cases, a business that is a defendant might eventually win the case but have their ability to do business harmed due to a loss in reputation. In such circumstances, mediation or negotiation may be preferential.
On the other hand, litigation can often be a part of the negotiation between a plaintiff and defendant. Two parties can enter into litigation, but a change of circumstances for one party (such as another lawsuit) can compel them to settle the case out of court. In other cases, the defendant may file a countersuit against the plaintiff, adding another variable to the negotiations. However, taking excessive or frivolous legal action can create a negative impression with a judge or jury, not to mention the public.
2. Juries and the Option to Appeal
When a case is settled through mediation or arbitration, both sides agree to abide by the decisions made outside of court. However, a mediator or arbitrator does not have the power of the court behind them. They cannot compel both sides to reveal all the facts of a case. The danger in arbitration is that one side may attempt to conceal facts. Under such circumstances, even a panel of skilled attorneys acting as arbitrators can make a wrong decision. Further, in some circumstances, the decision of an arbitrator can be legally binding, leaving little room for recourse.
The beauty of the American legal system is that cases may be tried before a jury. Sometimes, non-legal professionals bring unexpected and profound insight into a case which eludes even the best lawyers. The court can compel both sides to present all the facts in their possession, so that a jury can make a just decision. However, juries can make mistakes in their interpretation of the facts or go against existing precedents. In these cases, it may be possible to appeal a verdict based on errors made during the trial. An appellate court has the power to overturn a case or return it to a trial court and give jury instructions on what they are to decide on and how they are to come to a verdict. Many cases are lost in the trial court but won in the higher courts on appeal.
3. Exceptions to the American Rule
This is a small point in favor of litigation, but an important one. Under English common law, it was a tradition for the loser in a civil case to pay for the costs related to the trial. When the United States gained independence, this tradition was mostly abandoned, although there are a few exceptions. When it is "equitable" or fair for them to do so, a judge can order the loser in the case to pay the winner the costs for the trial. In Wisconsin, under statute 809.83, if an appellate court determines that an appeal was made to delay proceedings, it can order the party who filed the appeal to pay for the opposing side’s attorney’s fees.
Contact a Milwaukee Business Law Attorney
Determining whether to litigate a business dispute can be a stressful decision. When you are considering commercial litigation, you need to contact the knowledgeable Milwaukee, WI business litigation lawyers at Gimbel, Reilly, Guerin & Brown, LLP. We will help you understand your options and provide you with dedicated legal representation throughout the course of your case. Contact our offices at 414-271-1440.
Sources:
https://docs.legis.wisconsin.gov/statutes/statutes/809/VIII/83
https://northbaybiz.com/Monthly_Features/bizTips/When_to_Litigate_and_When_to_Avoid_It.php
http://www.sbnonline.com/article/sacrifice-benefits-arbitration-favor-litigation/
