Factors That Might Increase The Risk Of Business Litigation

Business Litigation Risk

Not all companies are prepared or equipped to handle the threat of business litigation. Two companies may have a perfect working relationship for years, and then something suddenly goes wrong. Disputes that seemed unthinkable or highly unlikely can pop up out of nowhere. This leaves companies scrambling to defend themselves. And businesses without a law firm on retainer will have to go find one.  But they can take steps to reduce the likelihood their organization will get sued. Here, we will examine some common factors that increase the risk of the court action.

Is Your Business at Risk?

Businesses come in all shapes, sizes, and industries. No two are created alike, and therefore the threat of a lawsuit will vary from one company to another. Nevertheless, there are some common factors that could make it more likely you’ll soon be in court:

Age of the business. Startups are especially vulnerable to legal action, for a number of reasons. They typically have few assets, for one. What they do have has probably not yet been invested in business litigation risk management. There’s also a perception that the company might be an easy target for an aggressive litigator. Whether that’s true or not won’t necessarily stop a lawyer from coming after your company.

Reputation of the business. This cuts both ways. If a company has a reputation of being untrustworthy or difficult to work with, they could see more frequent lawsuits. Meanwhile, another company might be generally more prone to engage in business litigation to get what it wants. Reputations exist for a reason and are often perpetuated by consistent business behaviors.

A breach of contract has occurred. If there’s been a breach of contract, there’s certainly a high chance it will have to be resolved in court. Of course, contract breaches do not usually result in instantaneous litigation. Breaches can even be allowed to persist for a time while the parties attempt a negotiation. But if either you or another party have violated the agreement, chances are you’ll soon see a courtroom.

Data and confidentiality breaches. We’ve seen in recent years how destructive data breaches, network hacks, and related problems can be to businesses. Companies are entrusted with the sensitive financial and personal information of their customers and clients. Confidentiality breaches are highly likely to lead to lawsuits. Fortunately, many of these issues can be prevented before they become problems with the guidance of a dedicated business attorney.

Intellectual property issues. Stepping on a company’s or individual’s intellectual property rights isn’t as difficult as one might think. A company need not do something obvious;y wrong like appropriate the McDonald’s golden arches as its own. Patents, trademarks, copyrights, and trade secrets protect innumerable organizations and individuals throughout the world. One wrong move, no matter how well-intended, could land your business before a judge.

Partnership disputes. It doesn’t matter how well-run a partnership is. The partners could have the best relationship and a solid partnership agreement on top of that. Any number of issues can lead to lawsuits among the partners. Those might include breach of fiduciary duty, misappropriation of funds, or financial problems. Not being able to agree on the future course of the company can also lead to business litigation.

Let Us Help Reduce The Threat Of Business Litigation

These are just a few issues that could pose a significant risk of court action for your business. However, there are steps your company can take to minimize the danger. It starts with hiring the right New York business law attorney. At Rosenbaum & Taylor, we not only defend companies in business litigation, but we also help businesses avoid lawsuits altogether. Find out how we can serve your organization. Give us a call today.

Further Reading...

Get a Free Consultation