Top litigation tips for small businesses

Numerous small businesses across the country will be faced with litigation on a daily basis. Whether you’ve got a claim against someone or you’re having to defend yourself, it’s a major worry. It can absorb huge amounts of time and money. And it causes real stress and anxiety for all involved. If you’ve never been to court, the legal system can seem complex and alien, however, with just a little knowledge it is something you can quickly grasp.

They key is to not panic as recent innovation in the legal framework has made it much easier for businesses to deal with. Here are some tips from Mark Beaumont, director of Annecto Legal - a network of litigators who offer legal and commercial advice to help businesses resolve disputes in the most cost effective way possible - to help make your first foray in litigation more manageable. 

A problem shared is a problem halved 

When you realise what you’re up against in court, it’s very easy to become embroiled in stress and worry and retreat inwards. It can also be tempting to rush straight to the nearest lawyer, hoping they will just handle it. But before you take any action, stop and think. What would you do in any other business situation? You’d likely talk to your team, get their views and ask your employees to help first. 

When it comes to litigation, you should act the same way. Don’t let the unfamiliar territory factor knock you off course. You’d be surprised at how helpful your colleagues can be. 

You need to work out who will be the key contact for your legal team – the person who can make the quick decisions that are sometimes necessary in litigation.  And then you should make sure people contribute using their particular abilities. If it is an employment case involve HR. Do you need lots of evidence? Involve your IT or admin department and get help accessing important documents and understanding disclosure policy. 

Failing to plan is planning to fail

When you’re up against a case, it can be easy to slip into reactive mode, waiting for events to happen to you and responding to them. As litigation involves a non-stop succession of major events, this “strategy” ensures that your case will eat up much of your valuable time. Soon, it will disrupt the smooth running of your business – a hidden but highly dangerous cost of litigation. This is, of course, one of the reasons why small businesses choose not to pursue cases.

Don’t let this happen. Instead, take some time out early on and create a litigation plan.  Keep detailed records of the time spent by your team on matters relating to your case, including precisely what you have done in this time. This means you’ll later be in a position to clearly present the exact costs of the disruption to your business. Make sure everyone in the team knows exactly how they’re helping and who they’re reporting to – as you would with any other task. As the time you need to dedicate to your case fluctuates, setting out responsibilities in advance will be an invaluable time-saver.

The bottom line

Of course, none of this solves the basic problem. Litigation is expensive. And risky. It can swallow a company’s resources and there’s no guarantee you’ll get anything back. It’s hardly surprising that small businesses are so reluctant to pursue claims. Sometimes it seems easier to just give up. 

Many small businesses think that it is too difficult to get funding for a claim, however, this has changed in recent years. Traditionally, you had to retain lawyers on an hourly-rate basis, which is a costly business regardless of whether you win or lose. Now there are a range of funding options that allow you to weigh up the risks before beginning your case. Here are some of them:

  • A Conditional Fee Agreement (CFA) is where a solicitor agrees to fund your case in the hope of being successful. They’ll charge you at a pre-agreed hourly rate but you’ll only pay if you win, and much or all of this can be paid by your opponent.
  • In a Damages Based Agreement (DBA) you’ll also only need to pay if you’re successful – but this time, your solicitor will charge you out of the compensation you’ll win in court. 
  • Third party litigation is when someone other than a law firm funds your case: their funding ensures that you can avoid taking any financial risks at all: they’ll pay for everything in return for a share of your damages. If the case fails, the funder bears all the costs – you pay nothing.

These new funding methods mean small businesses don’t have to worry so much about litigation. Because you no longer have to see your claim as a burden – it can actually be a positive asset for your business because it’s offers you an opportunity to achieve compensation without risk. 

So the next time you come across a claim, don’t panic! Remember, you have the knowledge and the team to see you through its challenges.  

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