The Business Case Behind Your Legal Case

I don’t know many people (besides attorneys) who enjoy being involved in legal proceedings.  But, there are times you need to assert your rights.  In business, when there is a conflict, you need to consider if it pays to exercise your legal rights.

Support Local Small Businesses?

A few months ago, one of the small shops across the street from where I live was suddenly alive again.  People were spending hours fixing it up.  It’s what stopped me from calling the police at 2am when I was woken up by the hammering and the noise.  As I believe in supporting small businesses, I decided if these people were likely working all day and working on their own business at night, it was worth a little less sleep to support that kind of effort.  I chose not to enforce my rights.

More recently, music started blasting into my home.  It turns out, there was a gathering for the grand opening for that same shop.  The door was wide open and the music was so loud, I could barely speak to the person who met me at the door.  Over the music I asked that they turn it down a bit as I was trying to enjoy a quiet dinner with some friends – and we were now being forced to scream to hear each other.

The person looked at me and said, “Sure, we’ll turn it down at 10pm.”  I explained (still calmly) I’d prefer not waiting until then.  He asked if I was having my dinner outdoors.  No, my windows were closed and I was eating inside.  He told me good luck - he had every right to have the music on until 10pm.  I explained that was not the case; he told me to call the cops.

This is a small local business.  Even if the law was on the side of the business (which it was not), how do you offend and upset your neighbors, potentially your largest source of business and word of mouth marketing, before you even get started? 

This question of what is legally correct and what you should pursue has significant implications for every business owner.  It applies to far more than noise ordinances.  Business owners need to evaluate the law along with the business case for their decisions.

Cease and Desist

Years ago, a friend of mine, found another company, across the country, in the same line of business, with the same name.  Having clear rights to the name, he sent them a “cease and desist” letter (asserting his legal rights.)  However, after doing some research, he found that the other company had a horrible reputation.  Feeling that was affecting his business, he opted to change his company name and did not pursue legal action any further.  He chose preserving his business reputation over continuing to pursue the legal matter, despite a clear right. 

Are You a Risk?

More recently, a restaurant owner made the news for suing his financial partner for financial improprieties, fraud, corporate waste, breach of fiduciary duty…and the list goes on.  Many people turn to lawsuits when they’ve been wronged and feel they need a financial remedy–or simply a “win.”  However, this needs to be balanced with the publicity: will this owner be able to attract other partners and investors after what is becoming a public battle?  From a business perspective, which is more costly: allowing his partner to walk away from the alleged wrongdoings – or recovering those costs while potentially forfeiting long-term business opportunities that may be missed due to a litigious reputation?

Hit ‘Em Where it Really Hurts?

Another company, in Canada, was faced with a competitor who allegedly defamed the company’s brand.  The partners decided that even if they were to prevail, the cost and length of a potential legal battle was not in the company’s best interests.  Rather, this company took a creative approach: as it was defamed online, the company used social media to respond to the competitor’s claims.

Is it personal - or can you make this just about the numbers?

A partner in an accounting practice, left her firm after questioning the ethics of her colleagues.  She was not contractually bound to the firm, nor was she restricted by any non-compete or non-solicit agreements.  She did not approach her old clients or colleagues.  However, clients did track her down – as did several co-workers.  Her former firm took her to court.  In initial hearings, the judge threw out many of the issues raised.  There were a few that remained.  Knowing that more litigation would cost more than a settlement (even with a solid case), she chose to appease her former partners financially - yet included as part of the terms that her former co-workers could not be sued for joining her new firm.  It ended an expensive and lengthy battle that was precluding her from building a business – and she was able to protect her team.

The Bottom Line

When you have a business, how do you evaluate what kind of response best suits your needs?  While each situation, company and those involved create their own set of circumstances and details to consider, these basic questions are a place to start: