Published Work

So Sue Me!

I always get a chuckle when a person gets a little frustrated with a business relationship and immediately they yell out, "Forget it, I'll just sue them."

I know this is almost never the best solution. We are too quick in American business to throw our hands up and call our attorney. From a practical point of view, not every situation can or should be resolved through the law.

It just isn't efficient or cost effective.

Most business issues need to be negotiated directly between the two companies involved. While lawyers are sometimes needed, it doesn't usually get us to a quick and optimal resolution of our problem.

When not to sue?

Many business people get their lawyers involved because they no longer want to deal with a difficult situation.

Don't use a lawyer as your "mouthpiece" just because you are sick and tired of dealing with the other business party. It is just too expensive and many times it escalates a situation to a point that is beyond your control. Have the discipline and the courage to negotiate the business issues directly for as long as you can. In the end, the business people need to reach the decision anyway and, if necessary, the lawyers should just document it.

After having been through business litigation a few times, I know how long and expensive it is. Somehow, when people realize the cost, it makes both parties more reasonable. The best advice I have ever received is that it is always better to negotiate then litigate.

But what if you have tried everything above and nothing works? Should you then dial your lawyer's number?

It is an economic fact that suing someone is expensive. It is suppose to be that way. In my experience, to take something to trial, it will cost upwards of $20,000. Think of the financial flexibility you can have in negotiation with the other company if you don't have to spend money on lawyers. As Zane Smith, of Zane Smith and Associates reminds me that "when you sue, the only ones who really wins are the lawyers."

When contemplating a lawsuit, Seth Weinberger of Mayer Brown Rowe and Maw, says "Clients should think twice -- and then twice again -- before considering a lawsuit. It's like building a house: invariably it is going to (1) go over budget, (2) take longer than you planned and (3) give you tons of grief you didn't anticipate. And the grief is the worst part."

The countless hours you will spend thinking and dreaming of a lawsuit will divert your attention from what you are really trying to do: run the business! Doug Newkirk at Sachnoff and Weaver says that, "In addition to the costs of the litigation, the client should focus on the costs to the business of diverting management attention and energies to prosecuting the case, and also whether a reputation for picking fights will hurt the company's standing among its trading partners. Obviously, if the overall relationship with a particular party is important to the business, you should be very reluctant to sue over a small issue with that party."

When to sue?

Art Mertes of Synergy Law Group tells me that you can resort to litigation when you think that you have the law and facts on your side and you have tried very hard to resolve the situation. But remember that "there are usually twists and turns in litigated disputes and so something that looks like a 'winning case' may face more complications later."

Most people settle before a judge or jury decides the case. So try to come to an agreement before you pay for a litigator to help you. If you must litigate, Weinberger suggest that you make "a worst-case analysis of the total costs of the lawsuit--and if the costs calculated in that manner justify the most realistic litigation award, then get the best litigator you can. But keep making that kind of cost-benefit analysis as the litigation proceeds through its stages: oftentimes the calculation changes dramatically as the case develops, and it's time to settle."

One place I always think it makes sense to sue or threaten litigation is to collect debts from customers that have not paid you. Mertes agrees and says, "This sends a message both internally and to your customers that you expect to be paid, and don't be afraid to include a provision in your agreements with customers that they will be responsible for your attorneys fees involved in collection of amounts due if they do not pay!" Besides, as I have stated many times before, all businesses need the cash. A real customer is one that pays. Make sure they do.

How do you find the right attorney to help you if you need one? Get referred to the best attorney who knows how to negotiate to a win-win scenario and whose ego isn't tied up in crushing their opponent. Mertes suggests that "you want somebody who is aggressive, but not at the expense of killing your deal."