Running a business is not without risk. At some point, most business owners will face a dispute, whether it’s with partners, vendors, other businesses, or consumers. But when does a dispute rise to the level where it may be necessary to pursue a remedy in court? While a skilled business attorney can best advise you whether you have a viable legal claim under New York law, there are several key factors that can help you assess whether you might have a business lawsuit.
1. There is a Legal Basis for Your Claim
To pursue a lawsuit, there must be a legal basis for your claim. In other words, you must have a right under the law or through a contract that was violated. Some common causes of action that can give rise to a business dispute include:
- Breaches of contract
- Partnership and LLC disputes
- Breaches of fiduciary duty
- Fraud and misrepresentation
- Self-dealing or misappropriation of business assets
- Tortious interference with contractual relations
Critically, New York courts require that a legal claim be rooted in statute, contract, or recognized common law principles.
2. You Suffered Demonstrable Harm
Even if you have a legal cause of action, you must have suffered demonstrable harm to bring a claim. Specifically, you must show that your business suffered financial losses, reputational harm, operational disruption, loss of opportunity, or other measurable damages. Without a showing of such harm, courts are unlikely to grant relief, regardless of the strength of the underlying claim.
3. Documentation Exists to Support Your Claim
The strength of your claim depends upon whether you have verifiable documentation to support it. Unless you can show evidence of the harm your business suffered and the other party’s wrongdoing, even the most meritorious claim will be difficult to establish. Common types of documentation in a business lawsuit can include the following:
- Contracts and agreements
- Communications, emails, texts, and other correspondence
- Financial records, invoices, bank statements, receipts, profit and loss statements
- Operational records, inventory reports, shipment records, and production logs
- Witness statements from partners, employees, or clients
- Electronic and digital data, server logs, and accounting software records
The type of evidence needed to support a claim ultimately depends on the specific facts and circumstances of the case.
4. You Are Within the Statute of Limitations
To seek a remedy for a business dispute in court, you must be within the statute of limitations. Once this deadline has expired, courts will typically dismiss a claim, regardless of its merits. The applicable time period to bring a lawsuit depends on the type of claim. While the statute of limitations for filing an action for breach of contract or fraud is generally 6 years, many other common types of business disputes have shorter deadlines you’ll need to be aware of.
5. The Potential Recovery Outweighs the Costs of Pursuing Litigation
Business lawsuits can be costly and time-consuming. They may involve attorney fees, court costs, discovery expenses, and expert witness costs, which will divert company resources. Before filing suit, it’s important to understand whether the potential monetary recovery would justify the costs associated with litigation.
6. Alternative Dispute Resolution Methods Have Failed
It’s always best to attempt to resolve business disputes through mediation, arbitration, or negotiation. These methods of alternative dispute resolution can help preserve business relationships and save both time and money. However, when alternative dispute resolution has been unsuccessful, litigation may be necessary to protect your rights. Under such circumstances, pursuing a lawsuit may be the most effective way to enforce contract obligations, recover losses, and obtain a legally binding resolution.
Contact an Experienced Long Island Business Litigation Attorney
If you are involved in a business dispute, it’s essential to consult with a knowledgeable attorney who can best advise you regarding your rights and options. At Barnes & Barnes, P.C., we offer trusted representation and high-quality legal services for a wide range of commercial matters across Long Island. Contact us at (516) 673-0674 to schedule a consultation.
