When a dispute arises between a business and another entity – be it a separate business, an individual or another group – there are a few ways to approach a resolution. Mediation might be one method, for example, or arbitration. But in some situations, those avenues might lead to dead ends.
In these cases, you might determine – with the aid of an attorney – that litigation is the only path forward. It’s a decision that comes only after careful consideration of all aspects of the case, ensuring the benefits outweigh the potential costs.
Here are four common business conflicts that can result in litigation.
Breach of contract
Contracts are a key element of nearly every business. They lay out exactly what each party is responsible for providing, as well as the price and timeline. If a party fails to follow the terms laid out in the agreement, a lawsuit seeking financial damages may be worth considering.
Intellectual property dispute
Intellectual property often serves as a differentiator in the business world, and for many companies is a huge part of their success. It’s important to ensure everything you own is properly trademarked, patented or copyrighted. If someone continues to violate those legal protections – whether it be a copyright troll or simply an over-zealous competitor – you might need to consider starting litigation.
Partnership and shareholder disputes
A toxic situation among a business’ leadership can be devastating to the health of the company. It might be because of a disagreement over the direction or operation of the business, a purchase or sale agreement, bylaw violations or even compensation. While the goal is to resolve these issues in the cleanest way possible, without pursuing a trial, sometimes neither side is willing to budge.
Fraud is more prevalent in the business world than many people want to believe. One industry group’s 2018 report estimated a typical organization loses about 5% of its revenue to fraudulent activities. The group also noted fraud committed by high-level executives resulted in a median loss of $850,000 to a company, while fraud committed by lower-level workers cost about $100,000. Considering the damage fraud can inflict upon a business, litigation might be the most effective way to pursue recouping some of those losses.