HOUSTON BUSINESS REVIEW

CYA: HANDLING BUSINESS LAWSUITS
By Shahara Wright

Shahara D. Wright, Business Law Attorney, "Serving businesses from start-up through expansion". You can cantact her by: calling her at (281) 980-2040, sending her an e-mail or visiting her website. For more information concerning Shahara Wright click here.

What are you going to do?

You haven’t been paid. Now you have to decide whether or not you are going to take legal action. You have a legal and binding contract, you weren’t paid, and now you should sue, right? Maybe not. What is the bottom line here? Money. Is it cost effective for you to enter into this legal battle? Remember it is not as simple as you owe me and now you must pay. You have your lawyer, you have the defendant, you have the defendant’s lawyer, and then you have the judge.

Realize that very few lawyers are going to take a business lawsuit on contingency. You are more likely than not going to have to pay for your attorney’s time. Therefore you are looking to spend between $125 and $250 an hour for your attorney. Plus court cost. What is the likelihood that your attorney’s fees and court costs will hit $40,000.00 before you recover any money? Then you have the defendant. Does the defaulting company have any money? If they didn’t pay you, is it because they couldn’t or didn’t want to? If you do win, how likely is it that you are actually going to get paid? All of these questions must be answered before you even walk into your attorney’s office.

So you have decided to sue.

First thing to do is file the suit of course. Then you go through a phase of discovery. This is often the most time consuming and expensive part of a legal battle. This includes review of the documents at issue, interviewing the witnesses, and finding out what the other side’s arguments and financial status is. Discovery can cost up to 75% of the legal fees and expenses incurred during the lawsuit. How committed are you to fight this? During discovery you are going to have to work. Find files, find receipts, find out who talk to whom, when the conversation took place, and what was said. These are all things you will have to do. How willing are you to assist in your own legal battle?

Settlement vs. trial?

Ultimately whether you settle or not, is going to be up to you. Your attorney can advise you but you have to make the ultimate decision. Are you focused enough to make a sound business decision or are you going to be so focused on “principal” that you are going to miss an opportunity to save your reputation? Settlement often means that each side takes something for themselves. That means that no one gets 100% of the pie. Most lawsuits are settled. That is because both sides realize that they do not want to engage in a costly and timely court case that may take days. Get what you can and get out.

If you decide to go to trial, you will also have to deal with publicity. Also, you will have to testify. How comfortable are you with being asked questions and interrogated as if you were to party to have done wrong? It’s not all bad. If the law is on your side and the Judge is too, you may get a higher return than you would have in settlement. You may even be awarded you attorney’s fees and court costs.

Was it worth it?

At the end of the day, you have to ask yourself “was it worth it?” Of course you will never really know that until you go through a lawsuit. You must be aware of the complex issues that arise and the unknown variables that no one can control. Examine your resources and pick your battles carefully. Remember, the “principal” of the matter is irrelevant. It is the business of the matter that should guide your decisions.

Nothing in this article is intended as legal advice and you should consult an attorney before making any decisions.