Thinking litigation could threaten your business? Let’s dive into how business lawsuits work and how to protect your company.
Business litigation. It’s the last thing any entrepreneur wants to deal with. From breach of contract disputes up 15% to employment claims in every industry (yep, yours included), business owners are seeing more lawsuits come through their doors and fight in their courtrooms than ever before.
Litigation law is time-consuming, expensive, and confusing. A skilled litigation lawyer can take on this burden. The right knowledge can help you avoid it in the first place.
In this ultimate guide to business litigation and legal disputes, we’ll cover:
- What business litigation involves
- The most common types of business disputes
- How to prevent litigation in business
- When to work with a business litigation lawyer
What Is Business Litigation?
Business litigation law covers all legal disputes related to business and commerce.
These cases may involve two separate businesses, a business and a private individual, or two business partners in a single dispute. Business litigation is any court action taken to legally resolve a disagreement when both parties can no longer come to an agreement through negotiation.
The point is this: Every business activity involves some risk.
Contracts can be broken. Business partnerships can fail. If these worst-case scenarios happen, then litigation is the only way to protect your interests.
According to recent reports, 70% of companies faced at least one regulatory proceeding in 2024. In 2023, only 61% of companies had the same experiences. Business litigation cases are becoming more common, not less.
The Most Common Business Disputes
So, you’ve heard about disputes… but what do they look like?
The most common business disputes we see at Glennon Law Firm include:
Breach of Contract Claims
Contract disputes are by far the most common form of business litigation.
If one party fails to uphold their end of a legally-binding agreement, the other side has legal grounds to file a lawsuit. This breach could take the form of non-payment, subpar work, or a flat-out denial of all responsibilities. Whatever the reason, when a business contract has been broken, legal action may be taken.
Guess what… Claimants were three times as likely to succeed as defendants in breach of contract disputes. And why? Courts favour clear, written contracts.
Partnership and Shareholder Disputes
Business partnerships and relationships can be rocky.
Partners may take different views on the future of the company. Shareholders may feel like the business is being mismanaged. These business disputes can have a significant emotional factor, which makes them very difficult.
Employment Litigation
The number of employment litigation lawsuits have grown across all industries.
Business owners need to have employment policies in place that fully comply with up-to-date regulations. They also need to keep records of everything. Failure to do so, and you could find yourself a target of any number of employment law suits.
Employment cases can fall under the umbrella of breach of contract lawsuits. A business could be sued for breaking the terms of an employee’s work contract. But there are many more lawsuits, including claims of discrimination, wrongful termination, and wrongful discipline.
Intellectual Property Conflicts
Your intellectual property is one of your business’s most valuable assets.
Patent disputes, trademark infringements, and copyright violations are all common. In fact, a report published in early 2025 found that 46% of surveyed companies were reporting greater exposure to patent disputes in particular. Protecting your business’s IP rights is vital.
How Business Litigation Impacts Your Company
Something many people do not consider: The real cost of litigation goes far beyond just legal fees.
In fact, while you’re in the midst of the process, you also experience:
- Lost productivity in key team members who have to focus on the litigation process
- Business reputation damage
- Damaged relationships with current and future customers and business partners
- Emotional stress and decision-making ability
- Potential loss of trade secrets in discovery process
Prevention is always going to be the most important strategy to combat litigation. But when it becomes inevitable, acting as quickly as possible gives you the best chance at success.
Protecting Your Business From Litigation
The best offense is a good defense, right? So, how do you defend against litigation?
Drafting Strong Contracts
Every single business relationship should start with a strong contract.
Contracts should contain clear terms, well-defined obligations, and a very specific remedies for every type of breach.
Do not rely on generic or free online contracts. You need to use professionally drafted agreements that are built to protect your business interests.
Documenting Everything
Documentation is your best friend when it comes to business litigation.
Document everything! Keep meticulous records of all business communications, transactions, and decisions made. This type of paper trail is gold when litigation comes knocking.
Email chains, meeting notes, signed agreements — all of these become potential evidence in any business dispute.
Implement Compliance Programs
Regulatory compliance isn’t a choice. In fact, cybersecurity and data privacy disputes are now affecting 36% of all organizations.
The best way to avoid these disputes? Have strict compliance programs in place to handle everything from cybersecurity regulations to equal employment opportunities.
Regular compliance audits, employee training, and updated business policies will help you stay on top of the latest regulatory changes.
Review Your Insurance Coverage
Commercial litigation insurance may provide vital protection for your business.
Directors and officers insurance, professional liability insurance, employment practices liability insurance — all of these can help you manage your litigation risk.
Review your policies every year to ensure you have adequate coverage.
When to Hire a Litigation Lawyer
Not every business dispute should be litigated. When push comes to shove, however, you know you should get professional help when you:
- Receive a demand letter or some other official request for payment or action
- Are subject to a regulatory investigation
- Need to enforce your legal rights through the courts
A skilled business litigation lawyer can provide several benefits:
- Experience with complex legal procedures
- Strategic thinking for the best way to resolve the dispute
- Negotiation skills that may avoid the need for trial
- Resources to handle the demands of the discovery and evidence-gathering phase
- Experience in the courtroom, if trial becomes necessary
The sooner you involve legal counsel, the better. Skilled legal representation can help resolve many disputes through negotiation before they reach litigation.
Alternative Dispute Resolution Options
Business owners sometimes want an easier way to resolve a dispute.
Alternative dispute resolution (ADR) options, like mediation and arbitration, can be better ways to resolve these conflicts. These methods are especially useful when both sides want to maintain the relationship, privacy is important, and a faster resolution is required.
But here’s the thing… Even when seeking an ADR option, you still need skilled legal counsel to ensure your interests are protected during the entire process.
The Litigation Process Explained
In the event that you do have to go through litigation, here’s what you can expect.
The litigation process typically includes these steps:
- Filing a complaint
- Discovery
- Pre-trial motions
- Settlement negotiation
- Trial
The process starts with one party filing a complaint and officially opening the case. Then, during the discovery phase, both parties exchange information and evidence related to the case. This can be the longest and most expensive part of the entire process.
Pre-trial motions could then be used to resolve some or all of the issues before trial. If settlement cannot be reached before this stage, then the case will go to trial where a judge or jury will decide the outcome.
Final Thoughts
Business litigation is a complex, expensive, and oftentimes necessary evil. The landscape of litigation is ever-changing. As new regulations, technologies, and business practices emerge, we see new challenges arise.
With that in mind, you can overcome the challenges presented by litigation with the right preparation and knowledge. Prevention is key. Spend the time on risk management, compliance, and having well-drafted legal agreements. When things do go sideways, the faster you act the better off you’ll be.