One of the primary goals of any small business is to avoid lawsuits at any cost. Even if you are 100 percent in the right, and even if you ultimately prevail, any sort of court proceeding will take months or years to resolve, and will cost you tens of thousands of dollars in lawyer and court fees that you well may not get back from the other side.
But no matter how hard you try to avoid litigation, sooner or later a customer, supplier, or creditor will threaten to sue your business. What do you do?
The normal kneejerk reaction is to call your business lawyer for advice. You will no doubt be frustrated, however, when your lawyer — even though he has worked with you for years and knows every aspect of your business — says he cannot help you defend the lawsuit because he doesn't do that sort of work.
You need a different type of lawyer to represent you in court. What should you look for in such a lawyer, and how do you find one?
John Balestriere, founder of the New York City law firm of Balestriere Fariello LLP (www.balestrierefariello.com) and a seasoned trial lawyer, says you should speak to a litigator as soon as a lawsuit has been threatened against you, even though you hope (and plan) to settle the lawsuit out of court.
"Delay is the No. 1 mistake I see clients make when a lawsuit is threatened," says Balestriere. "It's understandable that the client hopes they can settle the dispute on their own, or shop around to try to save money, but delay almost always causes problems, for a number of reasons." Among the reasons Balestriere cites are:
—as a nonlawyer, you don't know what defenses you may have to the claim;
—you also do not know if you have any claims of your own against the person who is threatening to sue (what the law calls "counterclaims");
—you may say something to the other side (for example, admitting that you may have breached a contract) that can come back and haunt you later on in court;
—if the other side sues you anyway, you will then have to scramble to find a litigator and familiarize her with the dispute on short notice.
Ironically, according to Balestriere, getting a lawyer who specializes in courtroom work (called a "litigator") on your side early on can actually help facilitate an out-of-court settlement. "Litigation is a different world than what most businesspeople are used to," says Balestriere. "It has its own language which can be somewhat arcane. Hiring someone who speaks that language and can communicate with the other lawyer will often get a settlement quickly."
Balestriere says he personally has settled more than a dozen disputes before the filing of a complaint or notice of claim in court. "There's a perception that litigators make money only if someone actually sues, and it's simply not true. Most litigators I know would much rather get a favorable settlement for their client than spend months battling in court with no assurance they will prevail."
Once a lawsuit is filed, things get out of hand quickly, as both sides tend to get their backs up, emotions are engaged, and it's much more difficult to achieve a settlement because both sides are looking to score points against the other. Balestriere says he has never seen a lawsuit resolved in less than six months.
So how do you find the right litigator for your case? Balestriere offers the following advice:
—first, ask an attorney you trust for a referral, because "your lawyer should be networked well enough in the local bar association that he can help you find the right fit";
—pick an attorney that has experience in the particular type of lawsuit — for example, a personal injury attorney would not be a good fit to handle a business dispute; and
—make sure your attorney is not afraid to go to trial if necessary.
"The best advice here was originally given by Theodore Roosevelt," says Balestriere, "who said that when negotiating treaties with foreign countries you need to 'speak softly but carry a big stick.' If the other side knows you are prepared and willing to fight a battle if it becomes necessary, they often will calm down and look for the middle ground that will lead to a compromise solution."
Unfortunately, many attorneys — even some holding themselves out as litigators — don't have a lot of actual trial experience. When interviewing attorneys, Balestriere says you should ask them point blank how often they actually go to trial and how comfortable they are with that process. "One of our firm's biggest advantages is that people know we are not afraid to go to trial," says Balestriere, noting that in a recent case he was able to get a jury award that was 60 times what the other side offered to settle for.
Cliff Ennico ([email protected]) is a syndicated columnist, author and former host of the PBS television series "Money Hunt." This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.