Commercial litigation concerns nearly any kind of litigation related to a business's governance, operations, and transactions. Lawsuits can come up in the contexts of ownership disputes, employment, contract breaches with other vendors or customers, regulatory actions, and many other scenarios that can affect a company's bottom line and subject its owners to personal liability. Recognizing potential legal risks within a business's activities before a complaint is ever served can save a company from a devastating lawsuit, and prepare it to be in the best position possible to defend itself should a lawsuit ever be filed. Effective legal risk management should include developing effective risk-reductive policies and procedures, and in the event of a probable lawsuit, developing an early litigation strategy.
Contract law is a pervasive feature of commercial litigation since it governs most business relationships. Contracts typically define relationships between:
Although business partners often start businesses together on good terms, it is common for owners' relationships to deteriorate within a few years. When business partners can no longer resolve governance disputes amicably between themselves, they turn to the company's governing documents such as their by-laws. Unfortunately, many businesses either do not adopt bylaws, or use a template version that was not adhered to throughout the company's history. The template either mirrors the state's automatic governing law for the entity, or otherwise provides an unjust answer because the by-laws do not comport with the company's years of practices. This often leads to the beginning of a years-long embittered litigation between a company's governing body that will leave everyone poorer.
Company governance disputes that typically require legal services often come up when the owners have tried to resolve their disputes between themselves first, and either a majority or minority ownership interest holder then wishes to use the legal system to enforce their will upon the business. Some situations where legal action can be taken to affect a company's governance include:
Lawsuits arising out of an employee's termination or wage & labor law violation can impact the morale of other employees, and expect changes in company policies that will affect them positively, if the suing employee's demands are appropriate. Like most other commercial litigation issues, the best means of defending a lawsuit is to never have one. Developing policies and procedures that will foster a non-discriminatory, wage law compliant, and overall respectful work environment, will be a company's best line of defense against employment-based lawsuits. Developing a contract form for managerial or other highly sought after employees which provides a business favorable terms also controls risk. The Labor & Employment section of this website provides more information about employment-related litigation.
Sometimes a business's activities can infringe upon the personal or property rights of others, and give rise to lawsuits based on tort law. Commercial torts arise in many areas of business practice, and can be controlled by federal and/or state law. Generally, these cases arise out of a business's "bad behavior" where the company neglects to fulfill its duties under the law or to others. Typical examples of tortious commercial cases include:
Besides private lawsuits, all businesses are subject to governmental regulatory review. Depending on the nature of the business, a company may be monitored by multiple agencies such as the Department of Labor (employment), Department of Health Professions (healthcare businesses), Department of Health (food safety), Alcohol Beverage Control (liquor sales), and local zoning boards (construction and safe design compliance). Regulatory violations can often result in some form of an administrative agency dispute resolution hearing.
Please contact our office to discuss possibly prosecuting or defending a commercial lawsuit, or to discuss managing risk in your company.