When is litigation worth it?

| Oct 21, 2020 | Firm News |

When you’re embroiled in a business dispute, you have a few options for reaching a resolution. The quickest path to putting an issue to bed is to offer a settlement. However, doing so will not enable you to tell your side of the story and require you to pay the costs out of pocket.

Another option is attempting to resolve your differences through arbitration or mediation. However, doing so requires you to meet your adversary part way. This option is most effective when cooler heads can prevail, and a resolution appears to be within sight.

The last option is business litigation. A resolution reached through the courts will carry the power of law and will likely be definitive. However, there can be considerable drawbacks to taking a case to court. You must decide whether litigation is worth the cost.

Performing a cost-benefit analysis

It is best to approach the question of whether to pursue litigation from a business perspective. You perform cost-benefit analyses all of the time. A similar methodology can be useful when considering your legal options. Of course, your decision should involve more than a simple accounting of dollars and cents. There are several other considerations to keep in mind, including:

  • Time: Don’t expect to file a lawsuit and have a decision within the month. The wheels of justice turn slowly. Complex cases can take years to wind their way through the court system. If you’re not prepared to go all-in for the long haul, litigation may not be worth it for you.
  • Impact on business operations: Will you be devoting most of your time to the lawsuit? If so, will your absence from the company have a significant impact on your business’s operations? It’s important to consider how a lawsuit will affect your company and the potential impact on the bottom line.
  • Counter-claims: The other party will likely make counter-claims against you. Are you prepared to defend yourself? Will a counter-claim open a Pandora’s Box, which will reveal things about your business you would rather have kept from public view?
  • Collecting a judgment: If you prevail, you will be awarded a judgment. However, this piece of paper is of little use if your adversary has exhausted its assets or has declared bankruptcy. Think about whether you will actually be able to recover what you want. That said, business lawsuits are often about more than money. If clearing your name or telling your side of things is more important, then collecting a judgment may be of little consequence to you.

There is no one determining factor to decide whether litigation is worth it, save for the fact that it might be the only way to reach a resolution. You should always discuss your options with a skilled professional to determine whether taking your case to court is the right path for you.