Lawsuit

No matter how you look at it, lawsuits tend to be costly forboth parties involved. Even the prevailing party, if attorney’sfees are paid and judgment received, loses a lot in terms ofemotional energy and actual time spent on various aspects of thelitigation. As a result, alternatives such as arbitration and smallclaims court have become popular ways of resolving thesesituations.

The difference between arbitration and a lawsuit is primarily informality. For example, in arbitration the formal rules of evidencedo not apply. Each side can go on and on with narrativediscussions, drawings, and charts, and the arbitrator will take inall of it and make a decision. There are no juries in arbitration.Instead, usually one to three people specially trained in thesubject matter of the arbitration hear the case. Arbitrations areheard much sooner than lawsuits can be scheduled. This can beeither good or bad, depending on which side you’re on.

Unless specified as such in a contract’s arbitration clause,arbitrations are not final and binding. Either party can decidethat they do not like the outcome. Once an arbitration award ismade and a binding clause is in the contract, a court will make thearbitration award an enforceable judgment.

Mediation is never final or binding and is heard in front of aperson who is an expert on the subject matter in question. Themediator can share the law in a way that allows both parties tohave their day in court, vent their position, and work toward aresolution, so that the relationship is not lost over the threat ofa lawsuit. Mediation is very effective in situations where there’san ongoing relationship between two companies.

The type of lawsuit that most small businesses will have to dealwith–if any–would be those brought to bear in small claims court.Small claims court can resolve differences quickly and efficiently.Attorneys aren’t permitted to be present until the appeal stage.Cases are usually heard within 30 days, and in some states theamount you can sue for has been raised to $5,000 under certainconditions. Each state–and often each county–has different rulesabout the allowable sum.

The following list outlines three steps you’ll need to take ifyou’re filing a small claims action:

1. You must determine the jurisdiction’s dollar limit on smallclaims actions.
2. Next, you’ll have to determine in which jurisdiction thedefendant resides or does business. This is the jurisdiction inwhich you’ll generally bring the action.
3. Finally, you need to visit the court clerk for the abovejurisdiction. The clerk will give you the appropriate forms forfiling the claim.