Business litigation is the process of presenting issues with business and corporate entities to the courts and arguing on behalf of business entities in court. There are a variety of topics that may be the subject of business litigation, and many business litigation lawyers are experts in one of these areas. These business litigation disputes can be incredibly complex and take time to complete. An understanding of business litigation is important both for law firms that engage in the process and businesses that will need legal services. This includes understanding what the process is, what the different types of commercial litigation are, and some of the preparation that can be done if business litigation is expected. This article will seek to provide some basic knowledge to business owners looking to learn more about the commercial litigation process.
Defining Business Litigation
As mentioned above, business litigation is the process of presenting and arguing cases on behalf of businesses that are part of a business dispute. These legal disputes arise out of business and commercial transactions. Business litigation law can touch all kinds of businesses, from small restaurants to large corporations to law firms. It can cover a myriad of subject areas, which will be discussed below, and requires skill and expertise to determine the issue and possible resolutions for businesses. Business litigation attorneys are skilled in a variety of different laws related to alternative dispute resolution and will often specialize in a specific area of business litigation because the issues can be so complex. These attorneys help businesses move through this process.
Types of Business Litigation
Several different types of business litigation focus on specific areas of the business facing the issue. Some are internal conflicts and business disputes, while others involve disputes that affect relationships with other companies. Some examples of the types of business litigation will be discussed in this section.
Employment
One of the most internal conflicts, employment business litigation deals with the issues the company is facing with its employees. Employment disputes often require a specialized business lawyer because employment legal disputes can be further divided into smaller categories that are each a large body of law in themselves. These can include legal matters like employment agreements, wage disputes, wrongful termination, Family and Medical Leave disputes, and harassment and discrimination claims. Employment disputes often involve the intersection of federal employment laws and state-level laws, so business litigators in this area must be knowledgeable in both. These claims may be pursued in agencies, which will have different procedures and laws than litigation in a state court. An employment litigation attorney will help keep the business on track as they handle an employment claim.
Breach of Fiduciary Duty
A case that arises out of a breach of fiduciary duty is a case that involves a relationship where one party takes responsibility to act for the interests of others and that party then acts outside of those interests. This relationship can be an employee-employer, officer-shareholder, agent-principal, or partner-partner relationship. This duty can also arise out of working in a special field that requires a fiduciary duty to clients, such as a business litigation lawyer, insurance company (insurance coverage disputes), accountant, or financial advisor. These breaches will often include issues like self-dealing, conflicts of interest, illegal activity, or misappropriating funds. It is not assumed that a poor business decision is an automatic breach because bad business performance can happen even when people act in good faith. This means that a breach requires that the party acted in bad faith or with a personal interest in the outcome.
Breach of Contract
A breach of contract claim arises out of a contract. A contract is an agreement between two or more parties where there is an offer and acceptance. Some common types of contracts are maintenance agreements, employment agreements, contracts for goods, and contracts for services. A breach of a contract and disputes may arise because the contract is poorly written, or they may arise when one party makes a conscious or unconscious decision to act contrary to the contract. Some contracts will require a specific type of conflict resolution, such as mediation or arbitration, but they may find themselves in business litigation if there is not an agreement in the contract. These are often the tip of the iceberg when a dispute arises, and there are often many other problems that will need to be solved to move forward.
Intellectual Property
Intellectual property rights are the area of business law that deals with a creator’s right to receive payment for their work. It involves areas of business law like trademarks, copyright, patents, trade secrets, and publicity rights. Usually, a business litigator will check to make sure that a business is receiving all the rights to its property. However, they may also represent businesses in litigation, even intellectual property infringement, and other issues. These cases can be very complex, especially when dealing with patents, so a business should hire a skilled business litigator to handle the intellectual property issues for them.
Class Action
Class actions are lawsuits where a large group of people with a similar problem sue a common defendant to recover collectively. These are common data breaches, pollution, product liability, employment, and debt cases. There are specific rules that must be followed for a group to certify as a class action. Having business litigation lawyers will help a business understand the possible defense that they may have and fight the certification of the class. These are often very long cases that involve interesting legal issues. They are also often settled without litigation, but a business litigation attorney that would follow a business to litigation in the event the case does not settle is a great help in assuring that the deal between the parties is fair.
Nondisclosure/Trade Secrets
Nondisclosure clauses are parts of a contract where the person signing, typically an employee, may not reveal any information about the company if they leave. These
business litigation cases typically involve the revelation of a secret that the business has, such as the recipe for Coca-Cola. The business may sue an employee for the information going public and may often recover a lot of the secret cost the company a lot of money. These clauses may also arise in the context of an employment dispute, especially if the employee thinks that the nondisclosure agreement is unfair or one-sided.
Conclusion
There are many other kinds of business litigation, but these listed are the most common forms that a business may face. Having a business litigation attorney that understands a business’s rights and goals in a transaction can lead them to the best solution. An experienced and talented attorney can help a business choose the correct path for disputes and can bring their expertise on the subject to the table. They can help a business understand the ramifications of certain actions and help bring them into compliance, or they can also represent companies in litigation. Business litigation attorneys help businesses stay afloat or thrive, and thriving businesses are helpful to the community as well.
Mark holds a Ph.D. in Leadership (Alliant's Marshall Goldsmith School of Management), an MBA in Finance (Pepperdine’s Graziadio School of Business), a Master's in Dispute Resolution (Straus Institute for Dispute Resolution, at Pepperdine Caruso School of Law) and a BSc in Urban Planning (Cal Poly Pomona).
mark@adrtimes.com
- What is the Federal Mediation and Conciliation Service (FMCS)? - November 6, 2023
- AAA Employment Arbitration Rules: An Overview - October 27, 2023
- Meaning of Confrontational in Dispute Resolution - October 23, 2023