When going through litigation, a business will have a lot to pay, in legal fees, towards their lawyers and to the person that sues them. However, on top of those fees, there are other costs that are usually hidden and cannot be recovered most of the times.
The first thing a company should worry about is the cost to their reputation. Litigation can drag on for years, and the company will suffer the costs – in reputation and brand image – every single month/year.
In short, if your company is subject to litigation and the media starts publishing articles about it, then the people will simply convict the company for something that’s not yet sure it has done and, eventually, not deal with them and their products/services anymore.
The Risks a Company Is Faced with During Litigation
Instead of looking for and managing their business, the CEO and the management team will spend time with external stakeholders and lawyers. In some cases, they may even brink in reputational damage and external risks to the professionals they will have to spend time with.
Naturally, the CEO and management will be under a lot of stress. This translates into possible clients lost – mainly due to neglect – and even poor business decisions.
All of the above add to the hidden and unrecoverable costs of business litigation that we mentioned earlier.
That’s why, in the following paragraphs, you’ll find five strategies that can help you manage the costs of business litigation.
- You – the CEO or part of the management team – must always be conscious of the costs in resources and time that are spent on the issues that are related directly to litigation. Obviously, your best call is to try and minimize them.
- Lawyers must be informed of all the issues at stake, from reputational and relational risks and costs to commercial drivers. Time-consuming tasks, such as dealing with the media, with financiers, or collating documents, must be given special attention.
- Instead of court proceedings, the management team should consider and focus on other settlement options, mainly some that can be done more quickly than the former. It is recommended that you try to quantify the overall costs brought to your business and not let the opinions of the lawyers take over in settlement discussions.
- It is also important that you inform your internal stakeholders about the disruptions that are likely to happen to your business, mainly before these actually happen. It is well known that fallout is usually minimized if people know exactly what to expect.
- Most importantly, you have to realize that the entire process of litigation can be lengthy and that there can be plenty of changes and twists to it. If you come up with any plans to manage or diminish the costs of business litigation, it is advised that you reassess them and make sure that they are still the best options you currently have in terms of moving forward. Obviously, if certain plans are no longer fit, you should actively search for others.
Even though the process of litigation can be dreadful, the CEO and the management team of the company in question must remain calm and actively look for ways to resolve the dispute.
For example, the company could determine whether the business or the life of the person that’s suing them is being disrupted. If so, then this aspect becomes a very important tool when it comes to bargaining for an out of court settlement.