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New Year’s (dispute) resolution Featured

6:20am EDT November 29, 2005
Most execs probably don’t have “Resolve a business dispute” on their to-do list for next year, but a lawsuit could easily be on the horizon.

George Moscarino, a partner at Cleveland-based Moscarino & Treu LLP, says when the economy is down, there tend to be more disputes with respect to contractual claims, and people want to resort to pre-litigation consultation before an actual lawsuit evolves.

Moscarino says he often receives calls from company owners who have waited too long to get a lawyer involved in their case. That is a mistake, because in-house legal departments or outside counsel can guide CEOs on how to handle a legal dispute before it gets to the point of litigation.

What happens if a CEO doesn’t get an attorney on his or her side from the very beginning of a dispute? Moscarino says the company could find itself involved in a case that it never should have gotten into in the first place.

“The ultimate sin is that they settle a case for a price that they could have settled on in prelitigation, after having spent tens of thousands of dollars on legal fees,” he says. “If you’re in management for a small or middle-market company, you don’t want to do that because that’s just money out the window, and that’s profits in that calendar year that you just wasted.”

Moscarino says if the CEO and his or her legal team can resolve the case before it heads to court, there’s a cost-certain resolution.

“Businesses, for the most part, want certainty. They want to know on a certain timetable how they’re going to be able to have closure to the business dispute,” he says.

And if the case goes to court, the business is giving up an element of control.

“If it’s not concluded by the whole resolution process prior to a lawsuit, they’ve then lost the ability to completely control (the timetable). You have the other lawyer on the other side, and you always have the judge and/or jury, depending on whether it’s a jury case.”

There are, however, cases that simply must be litigated, such as those in which an employee leaves with a patent or trade secret that is the linchpin of the entire business. In these instances, the CEO needs to decide whether that principle is worth the cost, the time and the effort of litigation.

“If you win, you get a judgment, but the problem is in our system. As we tell our clients, just because you won in the trial court, you then have the appellate process which has its ensuing time, fees, costs, additional heartache and time away from the business,” he says.

Moscarino says not many business owners who have been embroiled in a long litigation process have come to the conclusion that it was a great experience.

“(Litigation is) time-draining. It’s emotionally upsetting, and it takes (the business owners’) time away from what they really need to do the most, which is to run their business, project to the next year and do their business plan,” he says.

Moscarino & Treu LLP, (216) 621-1000 or www.mosctreu.com