Commercial

Commercial litigation means litigation (i.e. lawsuits) involving business-related issues. It can encompass a wide range of disputes, including contract breaches, and business torts, like fraud, unfair business practices, interference with contractual or economic relations, or business breakups. Our firm has experience in all these aspects of commercial litigation.

Commercial litigation specifically deals with disputes arising in a business context. It may involve issues related to contracts, transactions, business relationships, intellectual property, and other commercial matters.

Typically, a party initiates a commercial lawsuit by filing a complaint in the appropriate court. The complaint outlines the claims, facts, and legal basis for the dispute. Once served with the paperwork, the defendant has an opportunity to respond, typically with either an answer, a motion to dismiss the complaint (or demurrer in California state court), or counterclaims or some combination of the three.

ADR methods, such as arbitration and mediation, are often used in commercial litigation to resolve disputes outside of court. Many commercial contracts include clauses requiring parties to use ADR before pursuing litigation and many courts require parties to participate in some form of ADR before progressing to trial.

Mediation and arbitration are both forms of alternative dispute resolution (ADR), but they differ in key respects. Here are some important differences:

Role of the Neutral Third Party:

Mediation: The mediator, a neutral third party, facilitates communication and negotiation between the disputing parties. The mediator does not make decisions or impose a resolution but helps the parties reach their own mutually acceptable agreement.

Arbitration: The arbitrator, a neutral third party, acts like a private judge. In binding arbitration, the arbitrator reviews the evidence, hears arguments from both sides, and makes a final, binding decision (arbitration award) that resolves the dispute whether the parties like the outcome or not.

Decision-Making Process:

Mediation: The mediator assists the parties in exploring options, understanding each other's perspectives, and finding common ground. The mediator often gives their opinion of the case to help drive the parties to resolve it on their own terms instead of leaving it up to the courts to decide. The resolution is voluntary and requires the agreement of all parties involved.

Arbitration: The arbitrator evaluates evidence and legal arguments presented by the parties and renders a decision that is typically binding. The decision is enforceable in court, much like a court judgment.

Control Over the Process:

Mediation: Parties in mediation have more control over the process and outcome. They actively participate in discussions and retain the power to accept or reject any proposed resolution. If a party does not like the way a mediation is going they can just leave, the only consequence being the wasted cost of mediation.

Arbitration: In arbitration, the arbitrator has more control over the process, and the decision is imposed upon the parties. While arbitration allows for a more structured and formal process than mediation, it may limit the parties' ability to shape the resolution. Withdrawal from an arbitration is generally not an option as a court will enforce an arbitration award whether or not a party consents to it.

Formality:

Mediation: Mediation is generally less formal than arbitration. The focus is on open communication, and the process can be adapted to the preferences of the parties. Communications in a mediation are generally privileged—meaning they cannot be used in the related litigation—to promote candid settlement discussions between the parties.

Arbitration: Arbitration can be more formal, with a set procedure for presenting evidence and arguments similar to, if generally less formal than, a state or federal court. It may resemble a mini-trial, depending on the rules agreed upon or prescribed. While communications in an arbitration may also be confidential pursuant to the parties’ agreement, those communications can be used by the arbitrator in issuing its binding arbitration decision.

Finality of Outcome:

Mediation: The outcome of mediation is not binding unless the parties reach a voluntary agreement. If an agreement is reached, it is typically documented in a settlement agreement that becomes legally binding. If no agreement is reached, no binding resolution results from mediation.

Arbitration: The decision in arbitration is generally binding and enforceable in court. There are limited grounds for challenging or appealing an arbitration award.

In summary, both mediation and arbitration are alternatives to traditional litigation (i.e. having a judge or jury decide a dispute). Mediation is a voluntary and non-binding process focused on facilitating communication and agreement, and arbitration involves a more formal process with a binding decision made by a third-party arbitrator. Whether to participate in mediation or arbitration, both, or neither is a decision each client needs to consider under the particular circumstances of their case.

The duration of commercial litigation can vary depending on factors such as the complexity of the case, the court's schedule, and the parties' willingness to settle. Some cases may be resolved relatively quickly, while others may take years to reach resolution. If a case does not settle and is not dismissed before trial, it is safe to assume that it will take at least a year to resolve in the court system.

Possible outcomes include a negotiated settlement, a court judgment, or a dismissal of the case. Remedies may include monetary damages, specific performance, or injunctions, depending on the nature of the dispute.

Discovery is often the most time-consuming part of litigation. It is the pre-trial phase where parties exchange information and evidence related to the case. It includes depositions, interrogatories, requests for documents, requests for admissions, and subpoenas. If either side is unhappy with how the discovery process is going they may file motions in court asking for the judge to intervene and order the other side to comply with their discovery obligations or pay monetary sanctions in some cases. This process can be quite time-consuming and expensive for both litigants and attorneys. Clients in commercial litigation matters must be prepared to assist counsel by sharing all the relevant documents and information with them to ensure the discovery process goes as smoothly as possible.

Legal fees can be significant in commercial litigation. The general rule in the United States is that parties are responsible for their own attorney fees unless a contract or statute provides for fee-shifting. If a fee-shifting provision or statute applies and a litigant loses their case they may be responsible for the opposing party’s attorney’s fees as well as their own. If they win, however, the other side will have to cover their attorney’s fees and costs. Attorneys are generally paid on an hourly basis for commercial litigation work, though contingency fee or alternative fee arrangements may be available in certain circumstances. In a contingency fee arrangement, the attorney only gets paid if the client’s claim is successful and they are generally paid as a percentage of the judgment.