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At the heart of most business disputes in California lies a contract. Approximately 90% of conflicts stem from a perceived breach of contract, whether from the perspective of my client or another business entity. The remaining 10% is predominantly anchored in allegations of fraud, where one entity perceives a deceptive practice or inability of another enterprise to honor a contract from its very beginning.
A pivotal part of navigating these murky waters is a meticulous assessment of all potential risks. Because of this, an attorney should engage in detailed consultations with senior leadership, typically the CEO, to get clarity on what the best approach to resolving the matter may look like.
The strategy that follows can vary widely from expanding the scope of a lawsuit to seeking an expedient resolution via settlement. Additionally, it’s important to recognize the financial strain that litigation can impose, especially on smaller businesses, and judiciously manage legal costs in order to protect the company's financial health.
Litigation can sometimes corner a business, making it an absolute requirement rather than a choice. For entities facing such existential threats, the decision to engage in litigation is obvious. The nuance, however, lies in determining the intensity of the legal battle ahead.
For instance, would a company spend $100,000 in litigation to safeguard a million-dollar interest? Likely, it would. However, the calculus quickly changes when the stakes are even, such as if $100,000 is necessary to defend a contract of the same value.
Beyond immediate financial implications, a firm's reputation in handling disputes plays a long-term role. A reputation for fairness, coupled with an unwavering commitment to defend one's rights, often yields the most favorable outcomes in the realm of recurring business litigation.
The cornerstone of risk mitigation in the litigation context is discernment. It's crucial to contest cases with merit and opt for settlements in scenarios where combat is futile. A successful lawsuit isn't merely about achieving a favorable judgment, but also ensuring that the awarded sum can actually be collected on.
As an example, our firm handled a case that resulted in a $7 million judgment, but because the other party had limited financial resources, only a fraction of that amount could be recovered. Fortunately, the monetary award isn’t always the only consideration, as some businesses can find intangible benefits from winning a lawsuit, such as enhancing their market reputation.
In that same case, our client found that even though they were unable to collect the full judgment award, their triumph in the courtroom boosted their stature, deterred potential future litigants, and validated their investment in the litigation process. For more information on Common Legal Issues For California Businesses, an initial consultation is your next best step.