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What business owners should know about their nuisance number

There’s an old saying about being in business: if you’re in business long enough, you are going to get sued. Such an ominous prediction is not necessarily what an up and coming entrepreneur wants to hear, but it is often an unfortunate reality facing business owners.

Our system of justice embraces the adversarial process and it is (for some litigants) the last resort when it comes to solving a legal dispute. While litigation is a civil form of a dispute resolution, litigants complain that there are rarely any winners in a contested case that goes to trial. This is commonly because both sides spend an inordinate amount of money and may not get what they believe they deserve in the end.

This can be especially troubling for small businesses whose margins can be severely compromised by litigation costs. It is even more troubling when a lawsuit is largely baseless, but satisfies the basic requirements to survive a motion to dismiss. Therefore, the business is paying what may be considered a “ransom” in order to defend against lawsuit. Even worse, when you are facing off against a larger business with a huge litigation budget, are likely to be painted into a corner and forced to make a tough financial decision:

Do you put your “money where your mouth is” and fight it out, or do you pay to make the lawsuit go away?

The answer is based in what your nuisance number is (or should be). Your nuisance number should be the amount you are willing to spend to make the problem go away, no matter how baseless you believe the claim is or how right you believe you are, and how certain you are that you would be able to defeat the claim in full at trial.

After all, the more time you spend on a lawsuit, the less time you are spending on making money. Indeed, you may eventually be successful in obtaining an award for attorney’s fees for your trouble in defending a lawsuit, but this is certainly not guaranteed. As such, your nuisance number is critically important in gaining perspective of how your business may be affected in protracted litigation.

The preceding is for informational purpose only and is not legal advice.

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