I’m Jerry Carter with the Sierra Crest Business Law Group. One question clients come to me with is the question of whether it’s better to settle a business dispute or disagreement, or whether it’s better to take the dispute to court. Obviously, the answer to that question depends on many different variables and circumstances. 

Today I will address some of the general considerations that go into whether to posture a dispute for settlement versus press the difference into court. First of all, when we’re talking about business disputes, keep in mind, they come in all shapes and sizes. 

Types of Common Business Disputes

  • Money Owed To The Business
  • Unfulfilled Contractual Services Or Products
  • Unfair Competition Practices

Some conflicts are pretty simple. You believe you’re owed money by somebody else, and you’re trying to collect that money, the other person can’t pay or won’t pay and is throwing up additional resistance. 

Other disputes involve something that you believe the other party needs to deliver to you. This kind of difference could be the result of some product or service that they haven’t followed through on. You could be involved in a contractual arrangement where you feel like the other side is not living up to their side of the bargain. 

You could have a problem in your business where someone is harming your business by competing unfairly against your business or taking customers in an inappropriate manner.

If you’re involved in a business, you’re involved with people, and if you’re engaged with people, there are going to be misunderstandings and disagreements.

So, let’s talk about what an out of court settlement looks like? 

Out Of Court Settlements

An out of court settlement will be a compromise. A compromise is where you don’t get everything that you’re asking for. The other person or other business doesn’t get everything they’re asking from you. You settle somewhere in the middle. Often, it’ll be on a walkaway basis where each side agrees to drop their dispute and walk away. Alternatively, one party will pay the other side money or agree to do something for the other party, perform some service, deliver some product or redo work. Sometimes the parties will resolve their dispute, deciding along the way to move forward cooperatively, and might turn a business problem into a great opportunity, an opportunity for both sides. 

Any settlement that you have is going to involve an exchange of releases. A release is a legal term from either party that says in writing that they are not going to sue over the dispute. Typically you’ll want to walk away with some promise from the other side that the disagreement was completely resolved, and you’re both moving forward in peace. A settlement can bring peace because it can bring resolution to the issue. With resolution, you can move your business forward. 

Should I Take My Business Case To Court?

So that brings us to the question, “do I try to resolve my dispute out of court, or do I press it and going to court?” The simple answer is, “YES”. You should do everything you can to resolve a business disagreement as early as you can because it’s not going to get any better or get any easier to fix if you let it fester. So if there’s an option to resolve it out of court, without the necessity of going to court, you would take that option. Sometimes, the prospect of settling is not there, and you have to create the option. That’s where you take the case to court to force discussion.  

Some of the considerations that go into deciding when to settle or resolve a dispute out of court are a lot like shopping for clothing or a car in that every person on the planet has a different combination of objectives and desires. Your goals for your business may not be the same as John Doe’s objectives for his business or Jane Doe’s aspirations for her business. 

Three Considerations When Deciding To Go To Business Court

  1. Financial Impacts
  2. Time Required 
  3. Reputation
  4. Urgency
  5. Strength Of Legal Position
  6. Costs

The first would be money. How is this problem in your business affecting you financially? And you know, where are you financially, where are you trying to get your business financially and, and, and how’s the problem affecting you financially?

The second consideration of the type of objective would have to do with time. How much of my time is this problem wasting? What could I be doing with my time if I wasn’t dealing with this dispute or this business problem or this person who’s not paying me? And so how valuable is your time? 

The third type of objective that some of our clients are going to see, I would put under the category of reputation. But basically, how is this problem affecting my standing in the world? 

How is it affecting me as a business owner? How do other businesses view me, how do customers view me? How are the legal proceedings changing how I see myself? How is it affecting how my family views me? What do I want to be remembered for? What, what are my values? What do I want to stand up for? These reputational concerns may also be affecting your decision to settle or go to court. 

Another consideration in terms of settling a dispute is how far along you are in the disagreement? Is this something at the beginning stages where you suspect that there might be a problem but you haven’t really even talked to the other side or person? Or, is this something that is breathing fire down your neck and keeping you up at night? Relatedly, how urgent is the situation? Does it need to be solved? You know, on a scale of one to 10, does it need to be solved in this next week? Does it need to be solved in the next month? Does it need to be solved within the next couple of years that’s going to make a difference? 

It may seem a little ironic, but typically in my experience, the greater the urgency, the more pain the problem is causing. The sooner you make a decision to address the problem that’s causing your pain, the more options you’re going to have and they will be cheaper to put into place. 

Another consideration that will be important is getting an understanding of the pros and cons of your position. Knowledge is potential power because knowing the pros and cons of your position can help you take action that will maximize your potential. 

Another consideration is what is the cost going to be? The cost of going to court versus resolving a dispute out of court. Court proceedings can be expensive.

So, those things should be considered very thoughtfully because that’s going to dictate your path forward. 

Five Things A Good Business Attorney Can Do During A Dispute

I’d like to share with you five things that a good business attorney can do for you that will help in a business dispute or problem you are experiencing.

  1. Assess Your Legal Position
  2. Give Perspective
  3. Draft An Effective Demand Letter
  4. Summarize Court Costs vs Benefits
  5. Reduce Future Business Risk

Legal Position

Understanding your legal position is valuable information and relatedly to know how the courts and other attorneys will interpret your position. 

Perspective

The second thing a good business attorney can do, which is even more valuable, is to give you perspective. I know from being in disputes myself and representing business owners who are in disputes, sometimes it’s easy to get tunnel vision, locked into your position, and develop an emotional attachment to that position, which can prevent you from effectively resolving the dispute. It’s valuable for an attorney to take a look at your position because they are not attached to it one way or the other. A business attorney can and give you an impartial view of where you really stand or point things out that you may not have considered or raise questions that are important to understanding your dispute. 

As you talk with an attorney, you may realize you have a bigger problem than you thought or that instead, you have more options than originally thought, but that additional perspective is going to be valuable. 

Legal Demand or Response Letters

A good business attorney can write an effective demand letter or response letter when you’ve received a demand from somebody else. And it’s easy to underestimate how important that letter can be because. A demand or response letter is going to effectively layout your position and put your best foot forward. A lot of times, you’ll be surprised that just the simple process of exchanging a demand letter or giving a demand letter can get someone’s attention and help them understand you’re serious. Often, a dispute can be resolved at this point. 

Understanding The Costs Of Court

A good business attorney can help you resolve a case or a dispute before even going to court. Additionally, a good business attorney can give you a preview of the dispute resolution process and talk about what going to court would look like, how that would affect you monetarily, how that would affect you emotionally and in terms of the time commitment and how long it would take to resolve through the courts. You can take your individual circumstances and walk through them with a business attorney so that you can, take a look, a gaze into the crystal ball, so to speak. 

Reduce Business Legal Risk

Lastly, a Reno Business Attorney can not only help you resolve the dispute that’s happening in your business right now but can help your business avoid similar problems in the future. 

And so you’ll have killed two birds with one stone. You’ll be able to work on the current dispute while also fortifying your business and making it stronger in terms of avoiding future disputes. 

A Trusted Reno Business Attorney

So if any of these things that we’ve discussed apply to you or you recognize some of the situations we’ve talked about, I would welcome the opportunity to talk to you about the individual circumstances that are happening in your business. We offer a complimentary consultation to decide what the best path forward is for you. 

You can reach us at the Sierra Crest Business Law Group at (775) 448-6070. We’d love to have the opportunity to strategize with you.