Commercial Litigation

The phrase "commercial litigation" covers a broad spectrum of cases stemming from business conduct. The other chapters in this Guide that have nominated attorney listings focus on particular areas of substantive law. For instance, a business leader with a dispute involving securities laws might turn to the Securities & Venture Finance Law Chapter to better understand those laws, or a CEO whose company is being sued for employment discrimination might read the Employment Law: Management Chapter for a discussion of the basic principles of employment law. This chapter is different because it focuses on style of practice rather than a particular area of substantive law. This chapter covers issues common to many different kinds of commercial disputes and ways that businesses might use the adversarial system more effectively or avoid it altogether.

What is a Commercial Litigator?

A majority of the attorneys listed in this Guide could be considered commercial litigators--at least part-time commercial litigators--because most of the nominated attorneys will litigate a commercial matter at least occasionally. But most of the attorneys nominated for this Guide do not bill themselves as commercial litigators either because they concentrate on transactional work more than litigated matters, or because they normally litigate only a limited range of issues. For example, a wills and trusts attorney may litigate an occasional dispute arising out of a will, or an attorney whose primary specialty is litigating disputes over commercial agricultural contracts may call his or her practice area "agricultural law" rather than "commercial litigation," especially if he or she also does a significant amount of transactional work. Most of these attorneys (for whom litigation makes up only a small part of their practice) were nominated in practice areas covered by other chapters of this Guide. For example, an attorney who handles commercial real estate disputes may be profiled in the Commercial Real Estate Law Chapter and an attorney who only litigates commercial employment disputes may be profiled in the Employment Law: Management Chapter.

The attorneys nominated in Commercial Litigation differ from those in other chapters either because they handle a wide variety of commercial disputes (and thus do not wish to be described by narrow practice group title) or because they focus on honing the craft of effective courtroom representation and rarely are involved in transactional work. This is not to say that commercial litigators spend the majority of their time in the courtroom. The idea that a litigator spends most of his or her day arguing before a judge or making an impassioned appeal to a jury is a creation of Hollywood. Effective courtroom representation requires extensive behind-the-scenes preparation. Commercial litigators spend the majority of their time outside the courtroom reviewing documents, taking depositions, writing briefs, interviewing potential witnesses, visiting sights of disputes, and counseling clients.

A good commercial litigator will be able to play two roles--advocate and advisor. Many businesspersons fail to see how important it is that the attorney they hire be able to play both of these roles.

When to Sue

Eventually it may be necessary to sue another party. Litigation has become a routine cost of doing business for many companies in this country. Of course, litigation is not painless, even for the party that eventually wins the lawsuit. It is a skill to know when to turn to the courts to settle commercial disputes.

What to Do when Sued

At first glance it may seem that getting sued is worlds away from suing someone else, thus it may come as a surprise that responding to a lawsuit is similar to initiating one.

Seek Legal Advice Early

It is no coincidence that the first heading under this category is identical to the first heading under the category "When to Sue." Lawyers are essential to protecting business interests in litigation. The first chapter of this Guide, Selecting and Managing Counsel, describes an intelligent process for finding the right legal counsel for a business's needs. Individuals are always permitted to represent themselves in court, but representing oneself is only appropriate in a case in which there is very little money involved or in which the factual disputes are very plain. In all other disputes it is wise to hire counsel. In a number of situations, a corporation is required to hire an attorney to represent itself in court.

Appoint Someone to be in Charge

For larger companies, finding someone to be in charge is rarely a problem. Most large companies have in-house legal counsel that handles routine legal matters. In-house attorneys often are able to handle litigated matters. If there is no in-house legal counsel, someone in the company should be delegated to work closely with outside lawyers in coordinating company strategy and responses.

If a business turns to independent counsel to handle a commercial dispute, the in-house legal department often can supervise the outside lawyers and be involved in preparation of the lawsuit. Not only can the in-house lawyers offer insight into the company and suggest the best sources of information about company policy, they can handle some parts of the litigation in order to keep costs down. A good strategy when selecting counsel is to ask how outside lawyers will cooperate with a business's in-house attorney and/or staff to control costs and effectively represent the business.

The Best Defense is a Good Offense

Many commercial disputes involve counterclaims, cross claims, and joinder of third parties. "Counterclaims" are claims brought against the original plaintiff, "joinder" is a way to bring third parties into a dispute, and "cross claims" are claims between an original defendant and third parties joined to the dispute. Good legal counsel may be able to suggest claims that a company may have against the party bringing the lawsuit or against third parties. Assuming a more offensive posture may help convince another side to settle a dispute or drop it altogether.

Move the Fight to Your Backyard and Play by Your Rules
One of the most troublesome facts about commercial disputes is that a company can be forced to defend itself far from home in a court applying unfamiliar rules. If a business is sued in a distant court, it may be possible to force the plaintiff to transfer its complaint to a court closer to the company's home base. The rules about when this is possible are complex, but attorneys experienced in handling commercial disputes will know these rules well. Forcing a plaintiff to travel to another jurisdiction to bring a claim is sometimes enough to convince him or her to drop the claim. For this reason, many businesses include forum selection clauses in routine business contracts.

Ways to Avoid Litigation

It is the nature of most commercial disputes that attorneys are brought into a matter only after something has gone wrong: a deal has fallen through, an account is overdue, or a disgruntled customer has filed a lawsuit. While these certainly are appropriate times to call upon a lawyer, most commercial litigators could, if asked, offer plenty of advice on how to avoid these problems in the first place. As a result of years of litigating commercial disputes, commercial litigators are keenly aware of relatively simple steps that, if taken early, can prevent much larger headaches later. The trouble is that most businesses do not ask their lawyers the right questions in advance. The point of this section is to help the reader use legal resources more efficiently and cost-effectively.

Use Common Sense

Many businesses discover too late that they could have avoided the expense and trouble of commercial litigation had they exercised even a little common sense in the beginning of a business relationship. A wise business does credit checks on new customers unless the customer pays in full at the time of delivery or receipt of a service. Business partners can often be liable for each other's debts, so the prudent businessperson avoids partners about whom he or she knows very little. A business should learn about a potential business partners' litigation history before jumping into a joint venture. A company that has been quick to litigate in the past may be a company with which to avoid entanglements. At the very least, if a potential customer or business partner has a history of taking disputes to court, it may be wise to insist upon mandatory arbitration for any disputes that arise out of the relationship. The Alternative Dispute Resolution Chapter describes many forms of alternative dispute resolution available to businesses.

Prove It

It is amazing how many business leaders fail to understand how often a right or privilege can be lost for lack of a way to prove the contents of a business agreement. Many executives have learned the rule that most oral contracts are as enforceable as written contracts. What they have not learned is the corollary to this rule that, without a way to prove what was orally agreed upon, there is no mechanism for enforcing one's rights under the oral agreement. In the real world, it makes no difference at all what a vendor promised if there is no record of the promise and the vendor denies his or her earlier statements. In the American legal system facts that cannot be proven are not facts at all, they are mere allegations. In every business transaction, it is wise to spend some time imagining how one's actions might look in the future in a courtroom. Would there be evidence of an offer? Of acceptance? Of delivery? What about changes to an earlier written agreement? An agreement may have been in writing originally but the parties to it may have made numerous oral modifications that substantially affect its terms. How much of the altered agreement could be proven in court? Probably very little could be proven if neither side makes an effort to record changes in writing.

Use Language Clearly

It should be clear to most business managers that the law at times takes words very literally. A decision maker may feel awkward being blunt with clients, employees, or vendors, but a little clear language at the start of a business relationship can prevent a lot of headaches later. Courts sometimes can interpret unclear language in a way the parties never intended. Is it necessary to fire an employee? If so, that employee should know that he or she is being terminated and should be told the legally permissible reason for the termination. An employee told he or she is being terminated because "things are not working out" may infer a sinister reason for the termination. Is a vendor's offer unacceptable? The reply to the offer should be clear--"No, those terms are unacceptable to this company, what about the following terms . . . ."

When people deal with each other in person, facial expressions and nuances of language communicate a significant portion of their intentions. In phone conversations or written documents, the literal words alone have to carry all the intent. Thus, it is important for businesspeople to develop habits of using language precisely.

Develop a Healthy Dose of Skepticism

Many commercial disputes can be avoided if business managers develop a more realistic sense of reading people and the promises they make. Just because a person learns to use precise language himself or herself does not mean that other parties will do the same. A salesperson eager to close a sale may promise "100% satisfaction," but is the salesperson actually giving a warranty that if any part of a deal is not perfect, the deal is off? Probably not. More than likely, the salesperson is just puffing. One way to tell the difference between a warranty and mere puffing is to ask if the person making the claim is willing to put it into writing. Often, being asked to commit to a promise in writing is enough to make the other side back away from its original rosy estimates. A vendor may make an unrealistic "guesstimate" of how soon he or she can deliver a product, but a little persistent probing may show that he or she is unlikely to be able to deliver on the promise. If someone cannot guarantee an estimate it may be best to do business with a vendor who makes a more realistic estimate and stands by it.

Be Careful about Making Promises

Think carefully about making promises that will be difficult to keep. The business world is full of uncertainties, and no one can ever be perfectly positive that he or she can fulfill his or her end of a bargain. When the unexpected happens, a key employee leaves, the computer system goes down, a supplier is hit by a labor strike, weather fouls up the best laid plans and a company is unable to deliver what it promised, is there a way out? There will not be a way out if the person making the promise made it ironclad. Businesspersons should understand that their promises are like little insurance policies given to the other side in a deal. When a company promises to produce a product or provide a service by a given date and does not leave itself a way out, it effectively is assuming responsibility for any unanticipated occurrences that may prevent performance. It is a wise policy to have experienced counsel review agreements to determine whether a business is assuming more risk than it is aware of. After all, if a business is going to give out little insurance policies with every contract, then the price of the goods or service ought to reflect the additional insurance.

Have an Attorney Draft Preventive Forms and Procedures

It is unreasonable to expect employees to know all the intricacies of the law and how they might apply to every business transaction, but litigators experienced in unraveling commercial disputes are often an excellent source of advice for avoiding disputes in the first place. Often they can recommend simple language and phrases to add to routine forms used by a business. These simple additions can save countless headaches and costly litigation. In addition, many law firms are happy to help businesses conduct in-house training seminars for employees to help them understand the important role they play in enforcing company policies and properly documenting all transactions.

Do Not Let Emotions Interfere with Sound Business Judgment

Too many business managers feel uncomfortable when lawyers describe acts that can prevent legal trouble from developing. The attitude of many managers is that if they are too cautious they will lose sales or scare away suppliers. It would be wrong to say that emotions have no role to play in business. Good relations with customers are important to create and preserve. A good attorney should be able to offer suggestions on how preventive legal practices can be implemented without offending customers, business partners, or suppliers. In his or her advisor role, a good litigator should be able to help a business see when emotions may interfere with sound business judgment.

Respect and Educate Employees

It does a company little, if any, good to have a board of directors following every letter of the law if its employees do not know or care enough to do so. Employees are the front line dealing with customers and handling complaints. Satisfied employees who have an interest in their company's future work to keep customers happy and avoid disputes. On the other hand, disgruntled employees are an excellent source of liability for any company. A clientele that feels poorly treated by a business's employees is fertile ground for lawsuits. If employees are respected and educated about the business' legal concerns they are more likely to follow company policies and provide better customer service. Furthermore, employees who are educated about the reasons behind company policies will make better witnesses if called upon to testify in court about the company's operations.