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Why should a company avoid commercial litigation?

Companies of all types can be hit with litigation; from customers to business partners and vendors, people might feel they have a reason to disagree with you or seek compensation from you. While all litigation is not avoidable, most experts agree that unnecessary litigation can be bad for a company.

First, unnecessary litigation is obviously bad for the bottom line. Court costs, fees and other expenses can add up, which makes avoiding litigation in the first place a good financial decision in many cases. A good way to avoid unnecessary contract litigation is to create strong contracts in the first place, which is why involving a legal professional early in the business contracting process can be beneficial.

Another reason to avoid litigation when possible is that it is distracting for you and your business. If you are dealing with lawsuits, then you aren't able to put 100 percent of your effort into managing or growing your business. Some legal matters can even reach deep into your business, requiring information from your employees and distracting them from production.

A third reason you might want to avoid litigation is that it can be bad for morale, relationship, or brand image. You'll have to weight the benefits of fighting a legal battle with those risks. For example, if the legal battle is to preserve your business or your brand, it might be worth it.

It's worth noting again that all litigation is not bad for business and all litigation cannot be avoided. Working with a legal professional lets you assess the situation and make the best call for you and your business.

Source: FindLaw, "Common Sense Tips For Avoiding Litigation," accessed Dec. 24, 2015

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