Expert Witness Explains Small Business Litigation with Big Business Economic DamagesBy HG.org
Small businesses operate under the fear that they will one day be sued. Today, someone can sue a company for nearly anything. Even if the plaintiff sues a business and does not prevail, there can still be a significant impact to the business that must defend against the claim. Often, significant economic damages may be alleged that rival the damages lodged against big businesses.
Types of LawsuitsA small business may be subject to a number of different lawsuits. Businesses that want to protect themselves should be aware of the potential problems that can arise and know how to avoid them. Expert witnesses may be able to consult with the business to create policies to avoid such issues. They may be hired by litigants to show how the business has erred and how the plaintiff has been impacted. Some common lawsuits that small businesses face include:
Employment IssuesAn employment case can be a high-impact form of litigation. Small businesses may not be aware of legal requirements when hiring, disciplining or terminating an employee. An employment lawsuit may arise when an employee is discriminated against, is not paid proper wages, is wrongfully terminated or is harassed. Small businesses often face legal claims of this nature.
Breach of ContractBusinesses often have a number of contracts that they enter into with other businesses and individuals. This may consist of a purchase order between a supplier and a buyer, a partnership agreement, a non-disclosure agreement, a lease for commercial property or an agreement with a vendor. If the business breaches the contract, it may be sued for breach of contract and the damages can be sizable.
FraudFraud includes allegations of intentional misrepresentation, deceit or concealment of something important or deliberate and misleading actions such as lying to customers or treating them in an unfair manner. Fraud can also arise in cases involving mergers and acquisitions, such as a business hiding important financial information.
Partnership DisputesIn some cases, a lawsuit arises within the business itself. Partners who disagree may ultimately see themselves at opposing sides in court. In some situations, the partnership may dissolve entirely, leading to significant financial effects.
Breach of Fiduciary DutyIn some business dealings, the business or owner may owe a fiduciary duties to another. This arises when someone owes a legal duty to put an individual’s interests ahead of the person’s own. Business partners often have fiduciary duties to each other. Directors often owe a fiduciary duty to the corporation. When a business owner acts in this manner, it can cause significant and irreparable financial harm to shareholders that they can ultimately sue for.
Violation of Intellectual Property RightsSmall businesses may make an innocent mistake of using a copyrighted image or other intellectual property that another business owns. For example, the business may face allegations of plagiarism or theft of intellectual property. These cases do not necessarily require any type of malicious or deliberate harm and a business owner can be held responsible for an innocent mistake or an act by their employees. These cases can lead to some of the biggest payouts to plaintiff because the business can be forced to give the profits to the owner of the intellectual property.
DamagesPlaintiffs that file claims against small businesses may allege significant damages. Damages may include the amount of actual damages that a person has sustained, such as the amount owed on a contract. However, damages may also include anticipated amounts of damages. For example, a business that has lost sales because of the competitor’s actions may allege damages based on the anticipated lost profits. Employees may be able to receive damages for the amount of wages or salary they lost up until the time of the trial. Businesses that have limited operating budgets can be crippled or even bankrupted due to business litigation. Lawyer fees and court costs can be added to the ultimate award that the business is charged.
In addition to the financial impact, there may be collateral consequences. There may be significant harm done to relationships. The business’ reputation can be negatively impacted. Public disputes can harm a business’ reputation in the community and may impact customers continuing to do business with it. Sales and operating budgets may be affected. New opportunities may sizzle out. The business’ value or stock share may decrease.
Expert Witness AssistanceIndividuals who have been negatively impacted by the actions of a business may wish to contact an expert witness who can explain the extent of the damages and provide justification for asking for these amounts based on the specific circumstances surrounding the case.
While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.