Hypothesize that you are providing advice to a company (as a manager, owner, or
ID: 411709 • Letter: H
Question
Hypothesize that you are providing advice to a company (as a manager, owner, or valued employee) that is considering whether to file a lawsuit against or has been sued by another company, customer, or employee. What factors would you evaluate in deciding whether to file, settle, defend, or otherwise resolve a lawsuit? Please give thought to both sides of the coin: as a company considering whether to bring a lawsuit and as a company anticipating defense of a lawsuit.
The most important thing when considering whether to file a lawsuit against or having been sued by another company, customer, or employee would be to weigh the facts and evidence involved. The reason that this is the most important thing is that it does not necessarily matter who is involved (company, customer, or employee) if the facts are not on the company’s side. Even if the facts are in the company’s favor, it would be important to have concrete evidence to back it up when making a decision on the best course of action to take. The next thing to consider would be what is at stake and who is involved. For example, if your company’s reputation in the marketplace is at stake and the facts and evidence are there to support the defense, it would be important to defend a lawsuit brought against the company.
A company that is considering bringing a lawsuit against someone else should consider the facts and evidence first. Once it is established that the weight of the facts and evidence are there to support the company, then it would be important to evaluate what is at stake and who is involved. If there is a lot of money at stake for the company, it would be important to file the lawsuit. If there is reputation at stake, it would also be important to file the lawsuit. If it is a trivial amount of money at stake or the facts and evidence are not there to support the case, it would important to weight the costs and benefits of filing a lawsuit. It might possibly be better to let whatever it is go versus having the costs of filing a lawsuit with inadequate facts and evidence or for little return.
A company that has a lawsuit brought against it would be wise to evaluate the same things as it does when filing a suit, the facts and evidence involved. Then, it would be important to evaluate what is at stake and who is involved. If it is established that the facts and evidence are there in support of the company, then it would be important to defend itself when a lot of money is at stake or reputation in the marketplace is on the line. If the facts and evidence are not there to support the company, it would be important to move on to evaluating whether to settle or look to alternative dispute resolution for mediation. It would also be important to consider who is involved, if it a big company that has a lot of money to throw at good lawyers versus an employee with a modest salary, that could factor in to the lawsuit being something that is worth settling or defending.
In the majority of cases, it would be wise to consider the use of alternative dispute resolution to save on time and costs (Jennings, 2018, p. 111). Litigation can be incredibly expensive. Voltaire once said, “I was never ruined but twice; once when I lost a lawsuit and once when I won one” (Baum, 2010, p. 11-12). There is also the added benefit of privacy when a company utilizes alternative dispute resolution. This could be an especially beneficial course of action with disgruntled employees or customers.
Reference:
Baum, C. (2010). The benefits of alternative dispute resolution in common interest development disputes. St. John's Law Review, 84(3), 907-948.
Jennings, M.M. (2018). Business: It’s Legal, Ethical, and Global Environment. Boston: Cengage Learning.
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Explanation / Answer
The above post clearly outlines what are the different things that a company should look at and the different factors that a company should weight when considering to file a lawsuit or when defending itself in a lawsuit filed by another company against it.
Battling out in a lawsuit has several long term ramifications and could adversely affect various stakeholders of the company if the case is not handled and tackled appropriately. It is for this very reason that a company and its legal team should determine the stakes that are put on table for all its stakeholders.
The post talks about reputation. A company’s reputation is very important and directly and significantly affects its brand equity and value and hence its future earning and growth potential as well. A company should consider going for a lawsuit if its reputation will not get damaged severely in the process.
The post very rightfully mentions the importance of alternative dispute resolution mechanisms and how this route can be used by corporations to save on their costs as well as time while at the same time ensuring that the issue at hand is resolved.
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