There’s no denying that the United States is a litigious society. You’d be hard-pressed to turn on the television without being bombarded by advertisements for law firms educating you on your legal rights concerning a myriad of situations, from personal injury cases to drunk-driving violations. Undoubtedly, there are egregious examples of both attorneys and self-proclaimed victims that take advantage of the legal system, jamming the courts and driving up costs in related industries like insurance and healthcare.
Regardless of the abuses that tend to make the headlines, our laws form the foundation of this country and protect the people. The law is a broad term which applies to the formally sanctioned rules that govern communities, as well as the professions that enforce those guidelines. As the world’s population grows and technology advances, the complexity of the various legal codes has reached staggering levels to address the onslaught of issues that continue to arise. There’s a reason why law school is so selective and demanding. Even with years of additional training in the field, attorneys and law firms commonly specialize in a particular discipline. Similar to physicians, attorneys will concentrate on a specific branch of the law. It would be rare indeed to find an attorney who’s a jack of all trades that could expertly handle every aspect of the law.
There are so many nuances in the legal system. Corporations employ entire legal departments while smaller companies may keep firms on retainer. Businesses are often targets for lawsuits, whether or not there’s a solid basis for the case. High-profile companies are viewed as easy pickings for scammers who hope that legal counsel will offer settlements to avoid long, drawn-out battles that could play out in the public eye. Fortunately, those instances are few and far between, compared to the risk of breaching any of the multitudes of regulations that businesses must follow to stay compliant. Laws protecting employees and consumers are at the forefront of most of these statutes and ordinances. Violations can result in massive fines and brand damage, while jail time is even a looming threat for executives that knowingly disregard some of the laws. It’s imperative for companies to stay abreast of the legal issues that impact their operations. Most organizations implement annual training programs for their employees as well.
Business and commercial are two words that are often used interchangeably when referring to the marketplace. However, in the legal sphere, there are significant differences. Although there’s a saying attributed to Abraham Lincoln which goes, “He who represents himself has a fool for a client,” it’s still essential to be aware of your rights and responsibilities if you plan on conducting business in virtually any capacity. Some laws relate to the business, the employee, and the consumer. Obviously, the average person doesn’t have time for law school, and the code is clearly too overwhelming to go through line by line, even if you’re limiting it to business and commercial law. Some basics highlight the critical aspects of each field of study.
Business Litigation
Business Litigation is characterized by the federal and state regulations that drive the various facets involved in setting up and operating a business. These regulations broadly oversee a wide range of issues like employment and wage compliance, shareholder concerns, environmental protection, and workplace safety. With that level of accountability, is it any wonder that companies call on the experts to act as watchdogs and help manage these aspects, while executive and managers focus on running the day-to-day processes? There are safeguards that organizations can put in place to comply with these regulations, but when legal intervention is necessary, there are several typical cases that tend to drive the need for litigation.
For example, whistleblower cases fall under the jurisdiction of business litigation. If an employee exposes an employer’s activities that are believed to be illegal, unethical, or inappropriate, and feels he or she is then discriminated against or subsequently mistreated in the workplace, that could be grounds for legal action. The Whistleblower Protection Act allows employees working in the public sector, private companies, or either for-profit or non-profit organizations to take action when warranted without fear of repercussion. The law was passed specifically to keep employees from being persecuted for bringing attention to serious issues at their job since it’s so difficult to retain anonymity in most cases. While the burden of proof lies with the so-called whistle-blower to show instances of retaliation, skilled lawyers trained in business litigation are poised to assist the victims.
Partnership disputes are another typical legal entanglement. What may have started as a convenient or financially beneficial association to kick off a promising venture could eventually succumb to the pressure of business obligations. Once it becomes apparent that maintaining the relationship over the long term will be detrimental to the business, legal representation on all sides is advisable to facilitate a fair, equitable, and rapid extraction from the original partnership agreement.
Breach of Fiduciary Duty is often linked with an organization’s responsibilities to its shareholders. The legal definition of fiduciary duty is the obligation to act in the best interest of another party. In the case of shareholders, they rely on the officers of the corporation to carry out their duties with integrity. When the actions of business executives run counter to what has been agreed upon with the shareholders for the sole benefit of the company leaders, there are grounds for breach of fiduciary duty.
Breach of Contract is a familiar hiccup in business. It sounds more like an empty threat that’s often thrown around to ensure fulfillment of an obligation, whether you’re watching television or happen to be within earshot of an irate customer. For businesses faced with this legal matter, it’s a genuine cause for concern. Breaking a contract can have dire consequences for both sides. It may not only affect the victim who didn’t receive goods, services, or compensation. If a business is found to be liable for damages, it could do irreparable harm to the company’s reputation, impacting future business transactions with all customers. The burden of proof is on the victim, who must produce a valid contract, evidence that the contract was broken, and quantify the resulting losses. Whatever side of the breach businesses finds themselves, they should contact a business lawyer as soon as an irregularity presents itself.
Mergers and Acquisitions (M&As) generally have a negative connotation, thanks to their association with big businesses and the stereotype of mega-corporations gobbling up small mom-and-pop stores that can’t compete in the marketplace. This representation, while not entirely undeserved, fails to highlight the efficiencies and innovation that former competitors tend to generate once they join forces. These deals are especially complex, with both legal and financial implications. Without trying to oversimplify the individual processes too much, mergers create an entirely new entity from the assets of each company, and acquisitions involve the complete buy-out of another company’s assets. Within each channel, there are multiple subtleties in the way each agreement is approached, and naming conventions may be fluid to reduce the inevitable emotional factor involved in takeover scenarios.
Real estate is an ongoing concern for many businesses, even in the Internet era. Finding enough office space for employees to work or warehouses to store inventory is always a challenge. Companies are frequently at the mercy of the fluctuating market, and legal departments often partner with property management companies to secure the appropriate square footage for businesses. Agreements can entail multiple iterations to ensure companies occupy a suitable workplace in a desirable location, without the risk of committing to a long-term lease that doesn’t allow any flexibility for growth or contraction. Since real estate commands such a significant portion of a company’s resources; the burden falls on their legal team to ensure leases don’t have the potential to harm the financial health of the enterprise.
Commercial Litigation
Unlike Business Litigation, Commercial Litigation is regulated by the Uniform Commercial Code (UCC). The UCC was originally created to assist businesses, by managing the continually evolving legal requirements and addressing the differences in the individual state laws that hampered interstate commerce. Even though the title implies uniformity, each state has managed to customize the code to suit its unique demographic, so not only should a company secure the services of a commercial law firm, but it’s also advisable to ensure that the legal team is familiar with the state or states in which that company conducts business. As the name suggests, the UCC directs commercial transactions in the United States, specifically the sale and lease of goods, bank deposits and collections, negotiable instruments, investment securities, secured transactions, letters of credit, and fund transfers.
Property rights is a broad term indicating ownership over both tangible and intangible entities, with intellectual property encompassing patents, trademarks, copyrights, and trade secrets. Intellectual Property is an especially hot topic in business litigation. Social media has definitely played a role in making this legal focus increasingly relevant over the years. With information moving faster than most people can keep up with, it’s getting more challenging to track incidents that potentially involve infringement. Because most companies’ livelihood is dependent upon the viability of patents and trade secrets, they rely on their legal team to recoup damages for any misappropriation.
The majority of employment in the United States can be classified as “At-Will,” which means the employee is free to resign at any time, and the employer can terminate employees as long as the reason doesn’t violate any statutes like discrimination and so forth. However, there are examples of Employee Contracts that are legally binding agreements put in place for a variety of reasons. Most commonly, the contracts dictate specific time frames and price points, but there are also provisions that benefit both the employer and employee, which are typically created to retain talented employees with incentives. Inevitably, companies that deal with sensitive information will draft agreements to ensure confidentiality. Legal teams can both draft these documents, as well as lead the legal proceedings to enforce any missteps that violate them.
Business contracts are a fact of life. There’s no getting around legal documentation to protect the company. They ensure goods are delivered and services are completed timely. In an ideal world, agreements could be made and settled amicably, but emotion often takes over, and it’s up to the legal professionals to lead the way. Establishing the conditions and terms of a contract requires negotiation, in addition to clear and concise terminology that leaves no room for misinterpretation. Engaging law firms to draft contracts, or retroactively offer counsel when a dispute over existing terms arises, is essential to the long-term viability of the company. Handshakes and verbal agreements are hard to prove in a court of law, so companies are forced to take measures to preserve the business proactively.
Even seeing the individual activities for business and commercial litigation described in detail, it’s still tricky to make a clear distinction other than the regulating body that dictates the laws within each branch. There’s obvious overlap between the two specialties, and typically, law firms will offer both disciplines with the lawyers themselves that are well-versed enough in both business and commercial law to support their clients adequately.
The common denominator is that businesses are heavily reliant upon experienced and knowledgeable legal counsel. There’s no reason to expect that the climate of increasing government regulation over businesses, or America’s love affair with litigation will end anytime soon, so businesses have to continue to steel themselves against the continuing tide of legal challenges. Most businesses have recognized that trained legal professionals not only need to prepare the legal documents to protect the enterprise, but law firms or private attorneys should also be regularly engaged to ensure the company stays compliant as it adapts to changes in the ever-fluctuating political and economic landscape.
