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When Is Litigation the Best Option in a Business Dispute?

It isn't often, but sometimes it's the only path

Commercial disputes can arise for a number of different reasons. Regardless of the underlying circumstances of the case, parties can often benefit from seeking an efficient and effective resolution. For this reason, many business disputes are well-suited for alternative dispute resolution (ADR), such as arbitration or mediation. 

“Litigation is not a way to make money in business usually,” says Laura A. Brenner, a business litigator at Reinhart Boerner Van Deuren in Milwaukee. “Sometimes a business owner will think litigation is a great idea and when you tell them all the things that go into it, including the cost, the time, and the things that could happen, like counterclaims, they realize there might be a better solution. The costs of litigation are pretty high, so people don’t tend to run to courts first in a business dispute. But there are times that you just can’t get it settled.” 

Indeed, there are plenty of exceptions to the general rule. Here is an overview of the key considerations when deciding whether or not to litigate a business dispute in Wisconsin.  

No Real Progress Has Been Made on Settlement 

Alternative dispute resolution offers some important advantages. As noted by the Wisconsin Department of Administration, the term ADR describes “a variety of procedures used to resolve disputes and encourage win-win decisions.” Nonetheless, neither arbitration nor mediation is always the ideal path for resolving a commercial dispute.  

ADR is especially effective when parties are able to make some progress towards a mutually agreeable settlement. If you know that the business dispute simply cannot be settled, litigation may be the right option.  

“Sometimes there’s a fair amount of history between the parties and negotiations have just failed,” says Brenner. “You always try, but sometimes you can’t make the other side be reasonable, and when you need justice, you just have to go after it.” 

There are also situations where a business would prefer a court or jury over arbitration, she adds. “There are lots of reasons businesses say, ‘I’m not going to agree to an arbitration clause. I would like a court or a jury to decide my case.’ Sometimes you would rather be in a court and have an appellate court review the decision, which isn’t as available in arbitration.” 

Emergency Situations in a Business Relationship

Sometimes you’re forced to go to court before you can even consider ADR, Brenner says.

“There are just true emergency situations where you have to act quickly and failure to act can change the status quo for your client,” she says. “There is no time to wait and you have to seek relief in court right away.”

Even in those rare cases, however, “it doesn’t mean you can’t settle or consider mediation or other ADR options later.”

You Understand the Risks, Costs, and Potential Benefits of Litigation  

Finally, it is important to emphasize that litigation also carries certain risks and costs. Of course, there are also potential benefits, such as the business law ruling being public. Before pursuing litigation in a commercial dispute in Wisconsin, it is imperative that you have a full understanding of the risks involved.  

“A lot of times people come in with the misperception that it’s going to be a quick fix and resolve everything right away, Brenner says of litigation. It’s something that a reputable attorney should cover very early, along with the costs of the litigation process, including legal fees. 

“You always want to warn clients before they actually file, ‘Here are the things that could happen and here are the costs,’ and you never can be perfect in predicting because you never know what’s going to pop up or what the other side is going to do, or what a court may ask of you,” she adds. But one good thing is that some states, including Wisconsin, are implementing specialized business courts, and the business court judges are especially sensitive to the issues that come up in business cases and are very good at trying to make sure that costs are proportional to the needs of a case. 

What to Look for in a Business Attorney 

It should go without saying that consulting an experienced Wisconsin business litigation attorney is in your best interest. But other than the lawyer and law firm reputation, what might you look for? 

“It’s good to have somebody with a business background and knowledge,” Brenner says. A good business litigator will ask what your goals are and try to advise that way—not just run into court the first time there’s a dispute. A good business litigator thinks about those things in advance: what’s this going to cost, how much time is this going to take, are you going to get what you think you need, or should we try to resolve this first? 

Good business litigators learn their client’s business before they run into court. But they’re ready to run into court, if it’s necessary. 

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