Just So You Know, The Threat to Your Brand Stems from Litigation

By David Thompson

Jul 26, 2023 11:55 AM EDT

Photo by Markus Winkler on Unsplash(Markus Winkler on Unsplash) (Credit: Getty Image)

Disputes arise every now and then, mostly due to breakdowns in communication or misunderstandings between parties. Examples include but aren't limited to partnership and shareholder disputes, consumer fraud and protection issues, unfair competition, and interference with contract or business relationships, to name a few. When litigation is unavoidable, it's recommended to turn to lawyers with extensive experience to achieve the best results. No business is immune to claims, but certain measures can reduce the odds of such an event happening. Regardless if the dispute is large or small, it can negatively impact the bottom line and tarnish your good reputation. 

When A Company Is Facing a Lawsuit, It Has the Potential for Considerable Losses 

Lawsuits can be brought by individuals or entities who have incurred monetary damages on account of various reasons, including tortious interference, breach of contract, or deceptive trade practices. This list isn't exhaustive by any means. A Manhattan commercial litigation lawyer has a much better understanding of your industry, not to mention they're more attuned to the changing landscape. More than 90% of all lawsuits are settled out of court. Arbitration can be required, or both parties can agree to it. Nevertheless, if the word gets out, the repercussions can be serious. A lawsuit can affect your company by: 

  • Declining Its Value: Not only is litigation expensive and time-consuming, but it also takes resources away from running your business. Even if you secure a successful outcome, you'll see a drop in price share, so it's important to be preemptive in your approach. 

  • Driving Down Sales: Litigation can ultimately drive down sales and kill a business sale transaction. Customers stop buying from a brand that breaks their trust and don't easily forgive. Diminished sales can reduce profit margins because market share is lost over time.  

  • Causing The Business to Fail: The business winds down initially, and then there's a complete shutdown (or cash flow loss). Simply put, your business can be permanently destroyed as a result of the action of the defendant. Customers won't be returning to your company. 

What Can You Do to Avoid Legal Disputes? 

Legal disputes are an unavoidable consequence of running a business. Establish from the very get-go just how strong your case is, and at the same time, think about the unintended consequences. Lawsuits tend to get messy and expensive, but it's possible to control the costs via careful, strategic handling. Remember that once you've issued court proceedings, it's hard, if not impossible, to go back. Ideally, you should solve your dispute through an alternative method (e.g., mediation, arbitration, negotiation) because they can be conducted privately and require less time. Consider each option very carefully. You should decline an offer to mediate just to avoid spending a day in court. 

No matter how strongly you feel about the dispute, waiting for the ideal outcome isn't the best strategy. Just think about how much it will cost to take the case to trial and take the risks into account. Litigation is uncertain, so predicting the outcome is risky business. 

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