Whether you already own your own business or just like to stay current on business news, you likely need no reminding that we live in litigious times. At VLF, our clients have gotten past the eye-rolling stage when it comes to lawsuits, and they are asking the important questions, namely,
1. How can I use the legal process to protect critical business rights? And,
2. How can I best manage lawsuits as I get more customers, vendors, and business partners?
Obviously, unless you are just curious about superficial theories, those sorts of questions invite a long and ongoing discussion tailored to the reality of each specific business and owner. That said, here, in no particular order, are some thoughts that leap immediately to mind.
- Litigate to Protect Your Turf.
From knockoff goods to software piracy to customer list theft to cybersquatting, we’ve all heard the stories of unethical business practices targeting valuable intellectual property. If your company has developed a valuable brand, if it’s invested a lot in a new idea, or if it generates visible original content, you need to maintain a constant dialog with your company’s litigation counsel so that you can act quickly when bad actors try to illegally swipe your market share.
Elsewhere in VLF’s blogs, you can find our discussions about the finer points of patents, trademarks, copyrights, and trade secrets. For the purposes of considering business-to-business litigation, however, just make a quick note; litigation is not just about winning a final award of damages; often it is about getting injunctive relief, i.e., a court order preventing the wrongdoer from violating your intellectual property rights. Beware, however: with intellectual property, you need to be especially attentive about acting quickly. A delay could deprive you of exclusive rights and key remedies that exist in state and federal law.
- Litigate to Get Paid.
Suing for damages probably sounds like the most obvious use of business-to-business litigation, but did you know that the law affords several versions of the basic concept of getting paid on a contract? In Texas, the suit on sworn account can be a valuable tool in getting the uncooperative customer very efficiently. Similarly, if you are providing goods and services on a construction project, you likely have lien rights. Texas actually allows for two different kinds; a constitutional lien and a statutory one.
In a nutshell, these rights let you, as a vendor or contractor, encumber the title to the property so that the owner needs to make sure you get paid before profiting from the sale of the property. Lien rights are sometimes most useful to subcontractors, but, even more than in other cases, deadlines and “line perfection” steps are critical. From sworn accounts to liens, at VLF, our clients often look to us to help them implement best practices. In this way, by investing in some legal counsel up front, our clients can have the processes in place to vastly increase their ability to get to the front of the line and get paid even from the tightest purse strings.
- Clear documents reduce needless litigation.
Client contracts. Terms for Invoices. Non-Disclosures. Warranties. Employee Handbooks. These are a few of the legal documents that need to be clear and accurate to reduce the odds of complicated lawsuits. One example: if you follow entrepreneur news, perhaps you’ve read about the recent suit involving reality TV personality Marcus Lemonis, star of “The Profit,” in which he offers his mentorship and funding to businesses in which he sees potential. The allegations are still just being hashed out, and we at VLF have made no assessment of the validity of any of the claims or counterclaims, but, from even this initial point, it appears to be a case of a potential investor and a small distressed business disagreeing on initial representations and warranties, as well as how the due diligence process should have worked. Time will tell if there exist clear enough documents to get this case resolved quickly and efficiently, or if it becomes an object lesson on why up-front and carefully crafted legal documents are so important.