The Cost of Litigation to a Business Owner

You’ve been working hard to get your business going and you are still watching every penny that goes out the door. You may be wearing all the hats in your business or you may have a few employees for clerical or bookkeeping duties. And then you get sued. It may be for something big or something stupid but you are now running to get a lawyer to defend this lawsuit. What will it mean to your business?

You will pay money to a lawyer who specializes in litigation. He/she will not be able to quote you a flat fee because in litigation, you never know how settlement negotiations will go or whether you will need to go to court or your lawyer will need to draft a lot of documents. It could be a few thousand or tens of thousands of dollars. And don’t think it’s the principle of the thing. At some point, the money will be more important than the principle, no matter how right you are.

There are other costs to litigation. You will be spending a great deal of time on this lawsuit. You will need to gather documents for your lawyer to review. You will need to answer interrogatories (questions that the other attorney will ask), you may need to appear for depositions, and finally you may be going to court. That will add up to a lot of hours that you are not spending on your business.

In addition to the time and money you will spend, there is emotional wear and tear. You will be thinking about this lawsuit when you should be focused on your business. Your lack of focus could lead to fights with your partners or a loss of business.

Litigation can also affect your reputation. Your customers may hear about you being sued and wonder about how good your product or service is based on their just hearing about a lawsuit against your company. They may never know that you won the lawsuit because your victory may come in three to five years after it was started.

Litigation is very expensive. A great deal of it is avoidable if you regularly consult with other professionals – your insurance agent, your business lawyer, and your accountant. No matter how much you spend on preventative advice for your business, it is almost always cheaper than the money, time and aggravation you spend when you are being sued or suing someone else. Start saving money by calling in the professionals.

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