Frequently Asked Questions about Business Litigation
Q: What is involved when litigating a business issue?
A: This depends on the issue. The business owner would follow the same process for business litigation as he or she would for any civil lawsuit. This usually includes obtaining an attorney, handling pretrial matters such as motions, engaging in possible settlement negotiations, going through trial and then filing an appeal if necessary.
Q: Are there alternatives to litigation?
A: Businesses often use Alternative Dispute Resolution (ADR) methods. The ADR process usually utilizes arbitration or mediation. These options are attractive because they are often less expensive and more efficient than traditional litigation.
Q: What is the difference between mediation and arbitration?
A: Mediation is a cooperative process and uses a neutral third party (a mediator) to facilitate consensus-building and discussion in order to reach a mutually satisfactory resolution. Importantly, the mediator does not decide the matter on behalf of the parties, but instead encourages them as they work toward a solution. Arbitration, on the other hand, employs a different neutral third party (an arbitrator), who listens to both sides and makes a decision.
Q: Is the result of mediation or arbitration binding?
A: The judgment in an arbitration is usually binding on the parties. Often the parties decide prior to the arbitration proceeding that the findings of the arbitrator will be final and legally binding. This agreement is usually formalized by a contract signed by all parties involved. Much less commonly, parties may agree to nonbinding arbitration, which is traditionally viewed as a negotiation technique. Mediation is not binding, so the parties, if dissatisfied with the result, can move on to a courtroom proceeding, though they must often start over with new counsel at that time.
Q: Can results from mediation or arbitration be appealed?
A: Because the result of mediation is nonbinding, the parties can still bring their issues before a judge, although this is not technically an appeal. In the case of binding arbitration, an appeals process may take place if the parties have mutually agreed, before the arbitration begins, to allow one. In the event that the parties have not specifically decided to allow appeals, however, the decision of the arbitrator is final and the appellate process is not available since arbitration takes place outside the traditional court system.
Q: What is a class action lawsuit?
A: A class action is a judicial proceeding where usually one (or two) named plaintiffs represent a much larger group of plaintiffs against one or more defendants. Often, the issue is one where there has been an injury to a large enough group of people that individual litigation would be inefficient.
Q: Can business entities participate in a class action?
A: Yes. If a business entity has an injury in common with a greater group of plaintiffs that have formed a class, then the business may qualify as a class member.
Q: What is the legal fee arrangement for a class action?
A: Lawyers are normally paid on a contingency fee basis in class action suits. This means that the lawyer only collects a legal fee if a positive judgment for the plaintiffs is reached. Due to the high costs of class action lawsuits, contingency fee arrangements are generally the best option.
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