In one of the most famous lines from the works of Shakespeare, Hamlet famously inquires about an issue that those who study philosophy claim is the only real moral dilemma facing humanity: “To be, or not to be, that is the question”. As a lawyer, I am often queried on an issue of far less moral gravity but nearly equal importance to business owners.
All businesses become embroiled in disputes from time to time. Sometimes they resolve; and on other occasions they escalate. Consideration is then given to the options and the owner inevitably asks “can I sue for this problem”? This, however, is the wrong question.
The answer to “can I sue” is always yes. In fact, the answer to the related question of whether you can win is in the affirmative more times than not with the right lawyer. A better question is whether suit should be filed. Reaching the right answer necessitates exercising sound judgment on a number of different factors. Here are a few things I consider when offering advice to clients.
- How much is at issue? If the disagreement is over a damages amount that will be quickly outpaced by legal fees, strong consideration should be given to alternative methods to resolve the dispute. Perhaps mediation will work here.
- Does my business need to make a point? On some occasions, the damages in dispute are not as important as making a larger point to the business community. The most common example of this is bringing suit on an unpaid contract balance to demonstrate that you will do so.
- Do I want to risk making bad law? In some instances, bringing suit may serve a short term goal of addressing a dispute in which the company is immediately involved. The long term effect of the strategy may set precedent that hurts the business though. An example of this might be litigating a useful contract clause and having it declared an unenforceable provision by a court.
- Do I have the time? Most litigation takes no less than 18 months. This can frustrate business owners who can’t wait that long for a plethora of reasons. Consider the time value of money, time taken away from the business, and the cost associated with the litigation frustrations.
- Do I want to do business with the other party again? Litigation often sours relationships with the adversary and others in the industry who know about the lawsuit. If the relationship must be maintained, a lawsuit may not be the answer.
There are other factors to consider when thinking about whether to bring a lawsuit. Each situation is unique and calls for its own evaluation. The judgment of an attorney and others in your business is good advice to take, as others might have insights you have not yet considered.
The next time you have a business dispute, make sure you ask the right question and then consider the various factors that dictate whether the company should sue.