If ever there was a good example of the proverb “The best defense is a good offense,” it’s navigating business litigation. You can certainly take steps to proactively shield your business from disputes and bad actors, but the real work begins when problems come knocking.
Small businesses are particularly vulnerable, as they often don’t have in-house counsel standing at the ready when complications arise. Hiring a lawyer to handle even a straightforward legal battle can seem daunting.
Here are points to keep in mind:
Threat of litigation
In a best-case scenario, simply the threat of litigation might be all you need. If the other party has a reputation to protect, they will want to avoid the cost and publicity of a legal battle.
If the other party is trying to take advantage or is involved in a deceitful cash-grab, possible litigation could force them to abandon their efforts and cut their losses.
But if they call your bluff, you’ll need help.
Small claims court
Depending on the situation, you may be able to settle the matter in small claims court. If attorney fees are your concern, these hearings are generally conducted without attorneys and are bare bones. However, this format is limiting. In California, small claims court will only entities to file claims of up to $5,000 and there are limits on this if multiple claims are filed in a calendar year.
Arbitration and mediation
These options are faster and more flexible.
Arbitration is decided by an arbitrator or a panel. It’s still court-like, however, with the ability to call witnesses and present evidence. If the parties do not have a contract that provides for arbitration, they will need to agree to use this forum instead of resorting to the courts.
Mediation is even less formal. As with arbitration, the main obstacle is that mediation requires both sides to participate voluntarily and in good faith. Mediators are only there to provide guidance for a mutual resolution. Mediators do not make binding decisions or judgements.
Should you call a lawyer?
This is entirely situational and your call. In some instances, you can’t afford to not hire a lawyer. Contact an attorney for a consultation to help steer this decision.