How can I avoid litigation in my California business, and what do I do when I’ve been sued?

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You’ve heard it from news stories, from colleagues, and from business partners. Litigation can be messy, expensive, time-consuming and at times disastrous. It can also be cleansing and useful, but only when you have a healthy view on your goals and expectations. A trusting and positive relationship with a fine attorney is not a bad idea, either.

It is a cliché that contracts are only as good as the good faith the parties have in their contractual behavior. I have a good friend who runs a very successful, fairly large business who, when asked why he rarely has litigation, says that he chooses carefully those with whom he does business, does his best to honor the contracts he has in place and addresses disputes directly before they turn into litigation.

When you operate a business – from a large business to a “mom-and-pop” small business – disputes are inevitable. Disputes happen with vendors, with customers, with competitors, with governmental agencies and, frequently, internally amongst the business partners. Disputes are not the worst thing in the world, but they must be handled right, and addressed directly, if you want them to avoid becoming lawsuits.

Be careful to document communications you have. Keep good records that you can easily access – perhaps a “notes” section of contracts or electronic records that you can update regarding customers/clients and vendors. Be fair with them, and don’t draw lines in the sand – squeezing every dollar or taking advantage of a situation has its downsides as well as its short-term upsides. Review and update contracts and business forms frequently to make sure they capture the current state of your business interactions.

With business partners, try to see the point of view from every chair of the conference table – consider what each individual’s strengths, weaknesses, insecurities and motivations are. Understand it from their perspective, and you might find that a dispute you thought was unfair to you can be reasonably seen from another side.

Having said all of this, when a dispute appears to be headed toward litigation, you must do all of these things:

(1) Have a fine lawyer you trust be available to you to address issues as they arise, rather than later when it is too late. 

(2) Document, document, document. The most frustrating thing for a lawyer to hear is that all communications between the disputing parties were not in writing, or poorly documented. 

(3) Do not use text messages to communicate issues that may end up in litigation. Texting is so informal that it is very difficult to coherently view the parties’ intent. 

(4) Consider who would be witnesses for you in the litigation and discuss that with your lawyer.

(5) Gather documents and information that can help you, or which your attorney needs to know in order to understand how to help you.

(6) Do not despair. Do not get emotional or desperate – desperate people do desperate things. 

(7) Do not make concessions or take extreme (or really any) positions without discussing them with your attorney. 

(8) Be forthright and truthful with your attorney, even if it means admitting things that are not positive or of which you are not proud.

(9) Do not represent yourself. A person who represents themselves has a fool for an attorney.

If you are in litigation already, consider that it is a process that is more like a marathon than a sprint. Every case is different, particularly in business litigation. Every case has a strategy, like a war, and there are skirmishes that are not as important as others. As a former Army Officer, I can tell you that it is a constant balancing act to focus on the war, while also having a detailed approach to each part of that war on a day-to-day basis.

In finding an attorney to assist you, be careful of an attorney who promises terrific results, who overuses legal jargon or who spends substantial time talking about his/her resume to puff him/herself up. Try to find an attorney who explains your options in plain language, who is strategic and who listens to you before just talking about what he/she will do for you. Also look for a lawyer with experience both in resolving cases through mediation, and in trying cases before a judge or jury, in the event it is necessary to do so.

The Coopersmith Law Firm in California has that experience, and the skill set to help you through this difficult time in your business. Our legal team provides cost-effective litigation advice, providing the quality of a large firm with the care and attention a boutique business litigation firm can provide. Let us guide you through rough waters, and toward a positive result.

Answered 08/12/2015

Disclaimer: This answer was provided by an attorney selected to Super Lawyers, and is intended to be an educated opinion only. This answer should not be relied upon as legal advice, nor construed as a form of attorney-client relationship.

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