In general, taking issues to court is not always a bad thing. In situations of divorce, child custody, and criminal issues, the court provides a reliable and definite resolution to complicated problems. For many people, litigation is a beneficial way to end a legal dispute and move on with their lives.
Unfortunately, this is not always the case. When it comes to businesses, litigation can have a significant negative impact even when that is not the intention. Many business owners know to try and avoid litigation if at all possible, opting for other methods to resolve disputes.
Whether you own a business, manage a company, or are a conscious consumer, it is important to understand the full story when it comes to business litigation. Understanding what these cases mean and how others may react can help you to minimize fallout and control your narrative if you ever get into a legal dispute with your business. This knowledge could be the difference between maintaining a healthy company and facing the decision to close your doors.
Public Perception
Perhaps the most prominent issue with business litigation is public perception. Many times, businesses that enter litigation gain the reputation of wrongdoing. The public tends to think that you have been engaging in misconduct or otherwise indulged in questionable business practices. Often, the truth is lost between word-of-mouth accounts and media sensationalism, so ultimately, it does not matter whether the perceptions are true or not. The simple fact that you are battling an issue in court gives the public pause about your company.
It is important to note that many consumers engage with businesses based on their personal beliefs or morals. Though this can be a wonderful thing, it can cause issues for businesses facing lawsuits. For example, if you are facing a wrongful termination case in which an ex-employee believes that they were terminated because of their gender, individuals who are passionate about gender issues will likely stop engaging with your company. They may even actively protest, even if there is no court decision about whether discrimination actually occurred. In fact, the court may side with your business and you could still lose customers based on the incident, even though the law decided that no discrimination occurred. Such is the ferocity of consumer beliefs and public perception.
Cost
Many people falsely believe that businesses have access to free legal services, but this is not the case. Businesses must either pay an in-house attorney to be on retainer for their legal needs, or they must pay a business litigation attorney to step in and represent them when legal issues arise. This is a significant expense, especially since business litigation can sometimes drag on for an extremely long time. As many attorneys charge by the hour, a company may face a significant financial burden when they engage in business litigation.
This is assuming that the company does not lose money as the end result of the litigation. If the court rules that the company must pay reparations or renegotiate a contract, they may lose further money in settlements and profit losses. What’s more, the aforementioned public perception could cost the company another significant percentage of its profits and income.
Overall, the cost of litigation is a significant factor and should not be dismissed when considering how to proceed.
Business-to-Business Relationships
Just as public perception may be altered, business-to-business relationships may be severed or damaged from litigation. If you work with vendors and other companies to run your business, they may opt to cease working with you if they suspect wrongdoing. Just as consumers may have personal morals, other companies may also cease working with you based on their core beliefs.
Every business is focused at least partially on its profits and growth. If the businesses you work with believe that you may be in trouble or at risk of bankruptcy, they may opt to work with someone else for their own safety. For example, if you act as a paper supplier for a grocery store and you are going through litigation, the grocery store may decide to find a new paper supplier in case your business is affected or ends because of the litigation. Many businesses become concerned about potential supply chain issues or breaches of contract and may opt to play it safe by switching to a different business relationship.
Shareholders
Shareholders are often significantly affected by litigation, whether they are directly involved or not. Just as businesses do not want to risk their own interests by engaging in business with a company in litigation, shareholders may not want to risk their own finances. You may see shareholders selling their shares, and the cost of shares will likely drop also. This can cause irreparable damage to your business and create long-term problems.
Mediation
One option that may be available to you is business mediation. Mediation involves both parties sitting down with a mediator to determine a compromise that suits everyone. The mediator ensures that the decision is legal and fair, while both parties feel involved in the decision. This method helps you to solve your business’s issues internally rather than through litigation, which can be extremely public. This also helps both parties to feel good about the decision, rather than being handed a decision by a judge or jury.
Contact the Myers Law Group
It is important that you have proper legal representation no matter what method you use for your business legal issues. Our team has decades of combined experience in this arena, and we can help you to navigate your litigation or mediation with ease. We understand the challenges that occur in the business world and make it a top priority to help businesses understand the positives and negatives of every situation they encounter. Our legal expertise in this area is unparalleled and uncontested, and we can help you no matter what your industry may be.
For more information on how we can help you, please contact the Myers Law Group today.