Litigation From the Business/Transactional Perspective

My last blog post discussed the importance of contemplating litigation risk (or at least the likelihood of disagreements arising from time to time) in structuring business entities and relationships and in drafting contracts – in other words, anticipate and draft for the potential downside. By doing so, you can actually reduce the likelihood of disputes, and even if they do arise, they will hopefully be resolved in a quicker, less costly and more predictable manner. All of this allows clients to focus on running their businesses and making money rather than fighting legal battles and spending money.

Of course, not all disputes can be avoided or settled.  Sometimes you’re forced to litigate or arbitrate.  Even in those circumstances, however, my experience shows that substantial time, money, opportunity costs and emotional damage can be saved if those disputes are approached from a business/transactional perspective.  So, here are a few very brief thoughts on litigating “from the business/transactional perspective”:

• Approach every disagreement with a “problem-solver” rather than a “warrior” mentality.
• Try to compartmentalize disputes – disagreement about one issue doesn’t always need to poison the entire relationship.
• Never litigate over “a matter of principle” unless your business is able to afford whatever it may cost – and it always costs more than you expect.  Principles cost money and don’t generally enhance profitability.
• Don’t get hung up on who’s right or wrong – focus on the impact to your bottom line.
• Settling early costs a lot less than settling late.
• Consider mediation – it really does work sometimes.
• Litigating and winning almost always still costs you a LOT in legal fees, opportunity costs, and sometimes even reputational damage.
• Even in litigation, conduct yourself in a professional manner and with integrity – you never know who or what will lead to your next business opportunity.
• Just because you didn’t have an arbitration clause doesn’t mean you can’t agree to arbitration later on – it still may save both parties time and money.
• While in litigation, there’s no need to fight over everything.  Fight only the battles that matter – you look better in the judge’s eyes, and you don’t waste money on meaningless victories (or losses).

The bottom line is disputes cost money and take you away from your business.  Choose and conduct your battles wisely – from a business perspective.