Preventing Versus Winning A Lawsuit

We live in a litigious society. Every business is at risk of being sued. This threat exists whether you have a small blog or a huge e-commerce website. Given this risk, it is Preventing A Lawsuitimportant you understand the concepts of preventing versus winning a lawsuit and the differences between them.

Filing A Lawsuit

The act of filing a lawsuit involves the creation of a document known legally as a complaint and the payment of a filing fee at a courthouse. That’s it. The person filing the lawsuit does not have to meet any substantive standard when submitting the complaint. Let’s look at an example to see how this might play out.

Let’s assume I go to a plastic surgeon for a nose job. The result is bright red, so I always look like I’ve been drinking. I’m less than happy and end up suing. My lawyer would prepare the complaint claiming medical negligence, pay the fee and file it. The dispute would then go to trial where a jury would decide who is in the right. This lawsuit involves a potentially valid claim.

Now assume I have a vivid imagination. I read a lot of blogs asserting President Obama is from Kenya, which means he can’t be President since he is not a citizen of the United States. I know these articles are incorrect because he is really an alien from the former planet Pluto. I write up a complaint detailing a constitutional challenge to his Presidency, pay the filing fee and file it with my local courthouse.

In both these situations, the court clerk will accept my filing. The clerk never looks at the merit of the allegations. While my botched nose job might be a valid instance of medical negligence, the case against Plutonian Obama is obviously not. Still, each will move forward as though both are valid until a judge can review the paperwork.

Why bring these examples to your attention? To highlight the fact you can be sued at any time. Any troublemaker with sufficient funds to pay the filing fee associated with a complaint can sue anyone. While you may not be able to prevent a lawsuit outright, you can take steps to prevent one.

Preventing A Lawsuit

When thinking about the idea of preventing lawsuits, it sometimes helps to use car maintenance as an analogy. Car engine repairs can be very expensive. I know this because I own a Mini Cooper, which pretty much sets the standard for expensive engine repairs! Regardless, to limit the potential for problems, most people change their oil every 3,000 to 5,000 miles.

Does this eliminate the possibility of engine problems? No. However, it is much less likely you will have them.

The same approach applies to the prevention of lawsuits. You should perform an audit on the business to make sure everything is in order. Are your terms of use, privacy policy and disclaimers up to date? Is your domain name held on behalf of your corporate entity instead of in your personal name? How many contracts list the name of the company versus yourself? You may need to address copyright, DMCA and trademark issues as well. The goal of the audit is to identify problem areas and fix them before a third party sues you.

Will preventative measures stop every lawsuit from being filed? No. They can, however, act as a prophylactic for many potential claims as well as put an end to others very quickly. Let’s consider an example.

You own a forum. You have a DMCA agent registered with the Copyright Office and meet the rest of the requirements of the DMCA. One of your users posts a picture they don’t own. The copyright holder of the image complains. In most cases, they are going to know you have immunity under the DMCA and focus on the user who posted the content. If they do sue you, the complaint should quickly be thrown out given the DMCA immunity defense. Either way, the matter is resolved quickly and relatively inexpensively.

Winning A Lawsuit

The first thing to understand about “winning” a lawsuit as a defendant is victory is often painful. In this case, I am talking about a lawsuit that goes all the way to trial where a jury or judge finds in your favor. You know – the scenario you see on television shows.

Why is such a “win” painful? Lawyer’s fees. In the vast majority of cases, a defendant is not allowed to recover their lawyer’s fees even if they win the case. As a result, you might win, but still spend $75,000 or more in doing so. Congratulations.

In Closing

As a business owner, your goal should not be to win lawsuits. The goal should be to prevent them from happening in the first place. Prevention is much cheaper and comes with much lower stress levels. Contact me today to ascertain the steps we can take to limit the potential of legal problems for your online business.

Richard A. Chapo, Esq.