Many business disputes are, at their core, about money. Whether a company seeks damages for a breach of contract, requires a temporary restraining order or injunction to stop a competitor or other party from misappropriating trade secrets, or is pursuing any of the countless other claims that can arise in a business lawsuit, the bottom line is typically top of mind.
This financial calculus includes not only the amounts that may (or may not) change hands from a judgment or settlement, but also the hard costs involved in getting to that point. This largely means attorneys’ fees and costs, which each side in a commercial case will typically have to pay regardless of the outcome, as my colleague Seth Rosenstein discussed here.
These sums can be substantial and must be considered when deciding whether and how to pursue or defend a claim or in settlement discussions. But these hard costs aren’t the only ones that can arise in commercial litigation. There are many less quantifiable, but equally impactful, costs that a business may incur in a lawsuit that are often overlooked.
While litigation is indeed sometimes necessary, unavoidable, or advisable, understanding these hidden costs and risks is essential when discussing and evaluating case strategies with counsel.
Your Time – and That of Your Employees – Is Money
Many of the battles in a business lawsuit are fought on paper – in the briefs and other filings that the attorneys exchange and submit to the court. But the stories those documents tell come from the people and files at the companies embroiled in the litigation. And the burden of assembling and reviewing those documents and telling the story in depositions and at trial will, by necessity, fall on the business and its officers and employees – not their lawyer. Every hour spent responding to or dealing with litigation-related tasks is an hour not spent serving customers, generating revenue, or growing the business.
As mentioned, one of the most time-consuming aspects of litigation is gathering documents and files. During the discovery phase of a lawsuit, both sides have a legal obligation to produce relevant records. This often requires collecting contracts, invoices, emails, text messages, financial records, personnel files, meeting notes, and other business documents that may span months or even years.
Many companies store such records across multiple locations, computers, cloud platforms, and employee devices. Business owners and key employees may spend dozens of hours locating, reviewing, organizing, and explaining these documents to their attorneys. In some cases, the time commitment required for all these tasks can severely disrupt normal business operations.
Depositions, another crucial aspect of the discovery process, also require a substantial time commitment. A deposition is sworn testimony given outside of court, and it frequently involves business owners, executives, managers, or employees with knowledge of the facts of a dispute. Preparing for a deposition often requires several meetings with your attorney to review documents, discuss likely questions, and understand the legal issues involved.
Then add the preparation for the deposition itself. It could last a few hours or extend for multiple days in more complex or technical cases. For business leaders whose schedules are already full, spending an entire day in a conference room answering questions under oath (plus travel time) means postponing meetings, delaying projects, and stepping away from critical decision-making and other responsibilities.
These burdens and disruptions often go far outside of the C-suite to involve employees who may also need to be interviewed, deposed, or asked to assist in preparing responses to written discovery requests (called interrogatories). Their participation may be necessary, but it reduces the time available for the responsibilities they were hired to perform.
Additionally, litigation frequently involves strategy meetings, phone conferences, document reviews, mediation sessions, and court appearances. Even when your attorney attends many proceedings on your behalf, you may still need to participate in settlement discussions, appear in Court, provide updates, or make important decisions regarding the direction of the case.
And if the case proceeds to trial, that time commitment can increase dramatically. Trial preparation often requires business owners, executives, and key employees to spend significant time away from the office reviewing exhibits, preparing testimony, meeting with counsel, and attending court. The trial itself may require days or weeks out of the office, pulling decision-makers and essential personnel away from the day-to-day operations that keep the business running.
Add it all up, and a business lawsuit can devour hundreds of hours of management and employee time over its lifespan. That lost productivity has real economic consequences. Smaller businesses often feel this burden most acutely because a single owner or executive typically wears multiple hats. When a lawsuit involves a large company on one side that can more easily absorb these disruptions and a smaller company on the other that can’t, this imbalance of power becomes an oversized factor in deciding whether protracted litigation is tolerable and sustainable.
Reputations and Relationships at Risk
Beyond management and employee time spent off-task, a lawsuit can also threaten valuable goodwill and a hard-earned reputation among customers, suppliers, vendors, and the company’s workforce as a whole.
Court filings are generally matters of public record, and disputes involving businesses can quickly become accessible to competitors, customers, or the media. Allegations made in a complaint, no matter how baseless or unsupported they ultimately may be, can shape public perception. In today’s online landscape, news of a lawsuit can spread rapidly through digital publications and social media, making it difficult to control the narrative.
Internal relationships should not be overlooked. Litigation can affect employee morale and productivity, particularly if key personnel are required to participate in discovery, depositions, or trial preparation. Employees may become distracted by uncertainty or concerned about the company’s future, especially when the lawsuit involves high-profile allegations or significant financial exposure.
In sum, the “cost” of a lawsuit can extend well beyond dollars and cents, and the hidden burdens of litigation — including lost time, operational disruption, reputational risk, and strain on business relationships — must be part of the strategic assessment when deciding how to proceed.
If you are involved in or anticipate a business dispute, please contact one of the attorneys in Ansell Grimm & Aaron’s Litigation practice group.