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Everything You Need to Know About Commercial Litigation
- In 2021, large companies in the United States spent $23.71 billion on litigation.
- Since 2016, the cost of commercial litigation for businesses has trended upward.
- The litigation costs for companies are only rising and taking up a greater percentage of corporate revenue.
Furthermore, all the research about how much businesses spend does not account for the cost of settlements.
The fact is that commercial litigation is a long and costly process for businesses. Understanding how the process works is imperative for staying prepared and limiting the cost of a lawsuit. The earlier you prepare, the better the outcome for your company.
Keep reading for everything you need to know about commercial litigation.
What is Litigation?
According to Cornell Law School, litigation is the “process of resolving disputes by filing or answering a complaint through the public court system.” When one party takes legal action against another, it is considered litigation.
If the two parties cannot come to an agreement about a dispute on their own, then they will present the case to the court. This process can be very long and complicated, depending on the nature of the conflict at hand.
Common Types of Litigation
There are many different situations that may be taken to litigation. Some common examples include:
We’ll dive more into this type of litigation throughout the article, but this type of litigation happens when there is a dispute between an individual and a business or two business entities that are brought to court.
In a mass torts lawsuit, multiple plaintiffs seek compensation from the same defendant. Each has similar complaints. Given the number of plaintiffs, individual lawsuits would be impractical, so they collaborate on mass torts.
A rather new field of law, public interest litigations are lawsuits that the court files to protect a community. If a business or individual damages progress in the society, they may face legal consequences. Commonly, public interest litigation cases involve environmental and public health concerns.
Those who have suffered losses due to an accident may file for this type of litigation. In these cases, the plaintiff seeks compensation from the defendant, who harmed them either intentionally or via careless conduct. Workplace injuries or auto accidents are common examples.
Civil litigation cases happen when two or more parties request monetary compensation instead of criminal consequences. Whether or not the defendant faces criminal charges is separate from the civil battle. Examples include:
- Intellectual property theft
- Product liability
- Personal injury
- Real estate disputes
- Antitrust
- Medical malpractice
- Landlord-tenant/Rental disputes
If one party believes another infringes on its trademark, then they may sue to enforce their patent rights. The plaintiff can also request financial settlement, in addition to ceasing the use of the patented item/trademark.
What is Commercial or Business Litigation?
Any dispute brought to court that involves one or more businesses is considered commercial litigation.
- Partners
- Competing businesses
- Lenders
- Vendors
- Shareholders
- Business owners
- Other parties
How is Commercial Litigation Different from Other Types of Litigation?
The primary difference between commercial litigation and other types is that it involves businesses. Therefore, many of the issues in such a lawsuit are specialized and legally complicated.
Depending on the type of commercial lawsuit, it may be filed in federal court. This is most common for class action lawsuits or multi-district ones.
Compared to civil litigation, commercial cases are likely to last a very long time. Some cases may take years to resolve. This can also make commercial litigation more expensive to handle.
Types of Commercial/Business Litigation
There are many types of business disputes that may result in litigation. A few common types of commercial litigation are:
Actions against another business entity that violate the law and result in monetary loss, reputation damage, loss of competitive advantage, and reduction or market share. These may also be referred to as economic torts. They include fraud, theft of trade secrets, and tortious interference with a contract.
Construction litigation cases occur when construction law is violated. These may be payment disputes, negligence/misconduct, or contract errors.
Business entities operate with many contracts. Breach of contract actions are anything that violates the terms of a contract. The court may enforce contracts or seek compensation when one party breaks a contract.
A derivative action case happens when a corporation asserts a wrong against the corporation and requests damages are paid. It is a claim against the director for breaching their fiduciary duties.
Disputes stemming from transactions can turn to lawsuits. Purchase or sale litigation is about protecting the legal interests of a sale agreement.
Employment litigation disputes are a common form of lawsuit that companies face. There may be several reasons for employee lawsuits, but one may be employee discrimination.
The Civil Rights Act of 1964 prohibits businesses from discriminating against employees on the bases on their race, sex, national origin, or religion. Employees who believe the act has been violated may pursue legal action.
Antitrust laws regulate business corporations to prevent them from restricting competition and monopolizing the market. If a party believes that a business violates these laws, they may file an antitrust lawsuit.
Aviation disputes specifically refer to any aircraft finance, leasing, and trading activities.
Examples of bad faith cases include:
- Refusal to defend
- Threats against insured
- Reasonable settlement offers
- Unreasonable interpretations of an insurance policy
Class action lawsuits are some of the most involved business litigation cases. They typically involve multiple people filing a lawsuit all represented by a single member.
LLC membership disputes typically revolve around profit distribution, unethical conduct, and responsibilities. When members disagree on these grounds and are unable to resolve it, they may file a lawsuit.
Product liability claims are designed to ensure that consumers do not receive defective products. Flawed, faulty, and defective products are grounds for a product liability case.
Consumers have a right to access their own information. Additionally, these laws help protect them from inaccurate information. Businesses must provide customers with full disclosure of the information being collected, including why and where it is being stored.
Misrepresentation actions may lead to lawsuits. These are when an untrue statement by one party induces the other party to enter into a contract that causes the second party loss.
One element of negligence is a breach of duty case. This may be sought if a business’s conduct fails to meet the necessary standard of care.
Shareholders may bring up lawsuits as well. The most common are shareholder derivative suits, which means to bring a claim against the officers, directors, or board of a company on behalf of the corporation.
Issues revolving around tax disputes are crucial to resolve. Tax disputes are common grounds for commercial litigation.
A trade secret is any individual or company’s confidential business information, including financial or technical information. Anything the entity considers its “trade secrets”, including product formulas, fall under this category. Leaking a trade secret is grounds for a trade secret lawsuit.
Unfair competition is a group of torts involving causing economic injury to a business through wrongful or deceptive business practice. A few examples include:
- Bait and switch selling
- False advertising
- Substituting one brand of goods for another
How to Respond to a Commercial Dispute
If you’re facing a commercial dispute, then you may be wondering how to respond and what to do next. Your first instinct may be to rush to prove your side or battle the dispute. But before reacting with documents, take a step back. Properly responding to the dispute in the early stages is vital for ensuring your best possible outcome. Here are some steps to take:
Review Relevant Documents
Find all relevant documents for the lawsuit, and re-read them. Make sure you fully understand any contracts, terms, conditions, and anything else that applies to the case. Be sure to locate any key documents on your end as well. Let all individuals know they should not attempt to destroy any documents, as this can have serious consequences.
Carefully Consider New Documents
You will be required to disclose any relevant documents in court, so be mindful of new document creation. Assess all current documents and the risk they bring.
Preserve Confidentiality
Keep conversations about the lawsuit confidential amongst only the individuals/team. Encourage your team to be honest about the situation, so you can get a clear understanding of the situation. When discussing the topic, be mindful of open admissions, as this can affect your position for defense.
Hire a Commercial Dispute Lawyer
The early stages are the best time to bring in a commercial litigation lawyer. The business litigation attorney is an expert in the topic. They can best assess your risk, evaluate your case, and determine the next best steps. Hiring one early can help prevent you from making serious mistakes that could further affect your case.
Note that the confidential communications you have with your lawyer regarding legal advice do not fall under the disclosure obligation. The lawyer will assess the facts of the lawsuit, evaluate your risk, and develop the most effective legal strategy for resolving it.
The Commercial Litigation Process
The commercial litigation process can be lengthy and expensive. Here are the main 5 steps:
First, the plaintiff must send a detailed letter to the defendant outlining the terms of the claim. The defendant will have adequate time to reply. In this stage, you may attempt an array of alternative dispute resolution techniques, which may or may not be successful. The purpose of this stage is to demonstrate you’ve followed the proper procedure and made attempts to avoid corporate litigation.
If the other resolution techniques fail, then the commencement of the case may begin. The relevant court office must receive a claim form, detailing the facts on which the claim is based. Then, the defendant receives the claim within 4 months and has 14 days to generate a response.
Then, the court holds a case management conference to define the issues and outline the steps for trial preparation.
During this stage, you may be requested to share:
- Any documents relevant to the case
- Any evidence you plan to use (discover witness or expert witness statements)
Based on the information presented, the court may determine that there are not sufficient grounds for a commercial litigation. They will determine if the litigation should proceed or not. If so, a trial date will be set.
Ahead of the trial, you must present a brief, or written outline of your case. During the trial, the judge will hear both sides of the case and evaluate the evidence presented. After making the judgment, they will deliver it in court.
You can appeal the judge’s decision if the court grants permission to do so. They may only do this in exceptional situations. If the appeal is rejected or one is not made, then the ruling must be enforced.
The party who loses the case must pay the costs as soon as possible. Failure to do so will lead to enforcement by the judge, including debt orders.
What Does a Commercial Litigation Attorney Do?
The best way to resolve legal disputes as a business is to turn to a commercial litigation attorney. The commercial litigation process is long and complicated, which is why it’s so important to leverage the legal strategy of a professional.
As a legal expert, a commercial litigation attorney is qualified to represent your business in any dispute. At Counxel, our goal is to fight for our clients, protect your rights and help ensure the best possible outcome from the litigation process.
What is the best commercial litigation strategy? Your attorney will find the answer to this question and help you proceed logically.
These are examples of the cases they can help with:
- Fraud disputes
- Breach of contract claims
- Employment disputes
- Debt collection
- Unfair trade practices
- Product liability claims
- Breach of contract issues
The first step of commercial litigation in Arizona is to analyze the case. The attorney will ask several questions to best understand your position and how to plan your case. Whether you are seeking representation as a defendant or claimant, the commercial lawyer will determine the best legal steps for you.
The lawyer’s primary responsibility is to handle all aspects of the legal representation. Their duties may include:
- Evaluating the initial case
- Drafting pleadings and/or motions
- Crafting responses to the other party’s complaints
- Preparing court lawsuit documentation
- Selecting your legal strategy based on evidence
- Information exchange with the other party and its lawyers during settlement negotiations
- Negotiating during the settlement phase
- Appealing any failed negotiations
What to Look for in a Commercial Litigation Lawyer in Arizona
Having the right business litigation lawyer can help you ensure the best possible outcome for your case and your business.
While there are plenty of attorneys around, not all of them can meet your needs. During the heat of a lawsuit, it’s difficult to find the time to choose the right legal counsel. Yet, having an experienced team that truly believes in your case might be the difference between winning and losing your case.
Here’s what to look for in a commercial litigation attorney in Phoenix:
Specialized Experience
Experience is a must-have when choosing a lawyer. While overall legal experience is valuable, specialized commercial litigation expertise is vital. Look for a lawyer who is experienced with litigation and representation. They should have intricate knowledge of commercial lawsuits and the nuances involved.
If you are facing litigation, look for a lawyer who has handled your type of commercial lawsuit. The more specific experience the attorney has, the better it is for your business.
Simplifies the Experience
Legal cases can be confusing. With so many intricate laws and complex jargon, it’s hard to keep track of what’s going on and what you should do.
The best litigation attorneys in Arizona simplify the legal experience for you. They take the time to explain what is happening and what various terms and laws mean. They help you stay engaged and make sure you understand your rights and responsibilities throughout the process.
You are the Priority
Unfortunately, not all attorneys truly have your best interests at heart. Look for a legal team who looks past their paycheck and truly cares about your business. The right attorney makes an effort to build a relationship with your team and always acts in the manner of their clients, not themselves. They value collaboration and do everything they can to help you feel confident in their service.
Transparent, Fair Cost
Determining the cost of legal services for commercial lawsuits is an enormous challenge. Some legal teams are not up front or clear about their costs. This can put your company in a difficult position, spending a lot more than you are prepared to spend.
Choose a legal team that’s honest about the cost of their services. They should be able to outline exactly what they charge for and what you can expect to pay for their services. This helps you remain certain about the cost, which is important for every business.
Strong Reputation
The reputation of a legal team is important for assessing its quality. Top attorneys will have a strong reputation backed up by references and testimonials.
Always assess the reputation of a litigation representative before working with them. Ask them to provide references, but also research their reputation via review sites and former clients.
The Best Arizona Commercial Litigation Lawyers
Counxel Legal Firm is here to assist with your commercial litigation in Phoenix. We’ve helped several businesses and individuals with their lawsuit needs, and our experienced team is here to help you. When you work with our committed team of attorneys, you receive a partner who has your best interest in mind.
We have experience assisting with all kinds of commercial litigation in Arizona, including:
- Partnership disputes/ Partnership dissolution
- Employment law cases
- Creditor and debt recovery
- Liens and lawsuits
- Non-compete agreements
- Wage and hour issues
- Antitrust cases
- Aviation disputes
- Bad faith cases
- Breach of contract actions
- Breach of duty cases
- Business torts
- Class action lawsuits
- Construction cases
- Debtor or creditor actions
- Derivative actions
- Employment cases
- Fraud actions
- Insurance coverage cases
- Intellectual property (IP) and patent infringement cases
- Labor cases • LLC membership disputes
- Misrepresentation actions
- Product liability claims
- Securities litigation
- Shareholder issues
- Tax dispute
- Tortious interference
- Trade secret lawsuits
- Unfair competition actions
Turn to us for every stage of the process, from understanding the complaint, answering the other party’s negotiations, and applying for appeal if necessary. When you partner with our commercial litigation attorneys, you can feel confident about your options, cost, and legal team expertise.
We seek to simplify the legal experience for all of our clients while looking out for your best interest. For the best Arizona commercial litigation lawyers, turn to our team at Counxel Legal Firm.
Get started on your personalized legal strategy today. Schedule your strategy session.