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Los Angeles Business Organizations Law Blog

The discovery phase of your business litigation

As a southern California business owner, you have worked hard to protect your company from any risk to its success and growth. This includes drafting a solid contract for your clients, a thorough employee handbook and a zero-tolerance harassment policy. You offer training for your staff and oversee the daily operations to ensure quality.

Nevertheless, you are facing a civil lawsuit. This may be new territory for you, and the process is understandably unfamiliar. While your attorney will guide you through stages of the case, you may find it helpful to have a general understanding of one of the most critical parts of the process: discovery.

Dealing with a lawsuit against your business

Business owners in California may agree that a lawsuit is one of those events that can demoralize and discourage you, especially if it comes from within your company. However, no matter the source of the complaint, you are looking at a threat to your company's productivity, reputation and finances. Taking appropriate steps from the first moments after hearing of an action against you can make all the difference in the outcome.

The most prudent first step is to seek legal counsel. You will want to deal with an attorney who has experience in business litigation and who will give you clear and frank answers to your questions. Your lawyer will provide you with precise directions for proceeding, potentially including some of the following general suggestions.

Are you the victim of unfair competition?

The business world is competitive by nature. Your main objective is to attract new customers and build a base of loyal clients. This is something from which you cannot slack off because there will always be a competitor ready to snatch up any of your customers who are not satisfied.

However, luring your customers away from you through false pretenses is against the law. California laws and federal laws are clear about the use of deceptive practices as an unfair way to conduct business. When such actions bring harm to your business, you have the right to pursue legal action.

Has a once strong partnership gone downhill?

Starting a business may have always been a dream of yours. Acting as your own boss, having the ability to delegate tasks to others and generally being in charge may have been very appealing to you. Of course, you may have understood that you could not do everything on your own, and as a result, you created a partnership in order to have the input of another person in the running of the company.

Unfortunately, what may have started out as a beneficial arrangement may have turned sour after time. Many issues between partners can cause disputes that seem insurmountable, and as a result, legal action may prove necessary in order to address the conflict or to dissolve the partnership entirely.

Litigation isn't always the right answer in business disputes

You may be the consummate professional when it comes to your business dealings. You treat others you engage in business with in the same manner in which you wish them to treat you. You follow through with your contractual obligations and expect the same from others.

When a dispute arose between you and another party, you probably attempted to resolve it amicably, but found that just wasn't possible for whatever reason. Informal discussions broke down, emotions ran high and both sides made threats of litigation. However, litigation may not be the right answer in your situation. It may be worth your while to find an alternative method for resolving the dispute that doesn't drain your financial resources, take up a great deal of time and irrevocably destroy the business relationship.

Small businesses are vulnerable to many types of lawsuits

Running your own business means watching every dime. The success of your business is your personal victory, and you have likely staked your livelihood, your future and your reputation on its success. This is why, in addition to protecting your bottom line, you want to protect your business from lawsuits.

While you may feel you have that threat under control with careful compliance and due diligence, the possibility that someone will file a claim against your company is very real and dangerous to ignore. More companies face lawsuits than ever before, and some of them don't survive.

When can a seller back out of a real estate contract?

Searching for real estate can be frustrating and time consuming. Often, a potential buyer looks at dozens of offerings before finding one that will suit. When you finally found the perfect property, you may have felt a mixture of relief and excitement. Whether your pending purchase was for a business venture or your new home, you likely began making plans right away.

You probably paid to have an inspector check over the property, and perhaps you engaged contractors to make renovations or repairs. Maybe you sold your old house, bought new furnishings or rented a storage unit. It must have been a shock to you when the seller pulled out of the sale without warning.

You think marriage is tough? Business partnerships may be tougher

You've probably read all about the high divorce rate in the nation. If you're married, you may have firsthand experience with how challenging marriage can be at times. If you also happen to be a California business owner who is currently navigating the start-up phase with a new partner, you may be at risk for a break-up since the dissolution of business partnerships during the start-up phase is approximately 20-30 percent higher than the average divorce rate.

Perhaps you already have an inkling that your partnership may split. You respect the other person; after all, you shared a dream and really gave it your all in trying to bring that dream to fruition. If you still hope to make your business successful, and you want to part on good terms, you may want to seek guidance for how best to proceed to obtain an amicable separation of interests.

Your music may strike a cord with another artist

Music is nearly everywhere you turn. Even if you aren't an avid music lover, you will hear music in movies, on television and even in video games. As an artist, you may use elements of another musician's work, but you strive to make it your own.

However, if that other artist believes that your song is too similar, you could face a complaint of copyright infringement. You automatically create a copyright when you write or record a piece of music.

Signature or handshake: Which contract is best for you?

You probably make business agreements on a daily basis without a contract. When you order food at a restaurant, drop off your dry cleaning or get a haircut, you don't feel the need to negotiate terms. Even if you buy or sell a car to a family member or ask a good friend to help with a home repair, it may never occur to you that a signature on paper is necessary.

Perhaps you have conducted your small business this way too. The familiar, trusting method of reaching an agreement and sealing it with a handshake may seem sufficient for your clients. However, what happens if something goes wrong?

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