Corporate Litigation: 5 Common Mistakes
In the world of business, disputes are almost inevitable, whether they arise internally or externally. These disagreements can escalate into lawsuits, referred to as corporate litigation. Business-related lawsuits are often lengthy and complicated, with significant legal costs adding to the stress. Yet, sometimes litigation is the only way to resolve a business dispute.
Corporate litigation is filled with technicalities, formalities, and legal jargon. Mistakes made during this process can lead to wasted time and money, and in some cases, you may be required to pay a significant portion of the other party’s costs. Avoiding errors is critical, especially when high-stakes matters are involved.
Below are 5 common mistakes to avoid in corporate litigation.
1. Not Meeting Litigation Timelines
Under the Ontario Limitations Act, most corporate claims must be brought within 2 years of when the claim was or should reasonably have been discovered. If a claim is filed late, the defending party can ask the court to dismiss it for being outside the limitation period. The plaintiff will then need to justify why the claim wasn’t filed on time.
Additionally, the Ontario Rules of Civil Procedure specify strict deadlines for filing documents or taking certain steps. Failure to serve and file documents within the prescribed time can result in serious consequences. For example, if you’re a defendant in a corporate dispute and you fail to file your defence on time, you might be noted in default and held liable for the full amount claimed without having the opportunity to defend yourself.
2. Improperly Drafted Documents
The first step in corporate litigation is the exchange of pleadings. A pleading is a legal document that outlines a party’s position in a dispute. The Rules of Civil Procedure provide detailed requirements for pleadings, and failing to adhere to these can result in severe consequences.
For example, if you don’t properly plead the facts necessary to support your corporate claim, the court may dismiss your claim or require you to amend it. Even if you have a strong case, failure to plead your position correctly can lead to significant delays or dismissal. The strength of your evidence is irrelevant if your pleadings don’t comply with the rules.
3. Starting the Wrong Action
When initiating corporate litigation, it’s essential to bring the correct legal claim to court. Mistakes at the start of the process can be fatal. For example, confusing a breach of contract with fraud could lead to the wrong claim being brought forward, which may weaken or invalidate your case.
A common mistake is when a shareholder brings an oppression action instead of a derivative action. Shareholder oppression claims address situations where a shareholder’s individual interests are unfairly disregarded, whereas derivative actions are brought on behalf of the corporation for harm suffered by all shareholders. Bringing the wrong type of action can result in a court dismissing the claim or ruling that a different legal remedy is more appropriate.
4. Not Providing Necessary Evidence
Another frequent mistake in corporate litigation is failing to provide necessary documentation. While witness testimony is important, documentary evidence is often more compelling and can make or break a case.
Examples of relevant documents include contracts, emails, corporate filings, receipts, share certificates, and financial records. Many corporate disputes hinge on analyzing such documentation to determine the rights and obligations of the parties involved. Failing to maintain or disclose relevant documents can severely harm your case and may lead to unfavourable outcomes.
5. Consulting a Lawyer Late in the Process
Corporate litigation is complex, involving intricate rules, statutes, and legal strategy. A corporate litigation lawyer is best equipped to guide businesses through this process, ensuring compliance with procedural rules and advocating effectively.
Some businesses attempt to navigate litigation on their own to save on legal costs, but this often leads to more expensive mistakes. Consulting a lawyer early in the process can help avoid pitfalls and improve your chances of success, potentially even resolving the dispute before it escalates to court.
A corporate litigation lawyer can assist with negotiation, properly drafting pleadings, and preparing for trial, helping you avoid costly mistakes and ensuring you present the strongest case possible. The cost of legal assistance is usually outweighed by the benefits of avoiding legal missteps and protecting your business interests.
Conclusion
Corporate disputes are an inevitable part of doing business. If those disputes escalate into legal action, corporate litigation may be necessary to resolve the matter. However, corporate litigation is highly technical, and a single mistake can have significant financial and legal consequences.
The five common mistakes outlined in this article are just a few examples of the pitfalls businesses can encounter in corporate litigation. Consulting a corporate lawyer early in the process can help avoid these errors and increase the likelihood of a successful outcome.
Contact Achkar Law
If you need assistance with corporate litigation, our corporate litigation lawyers at Achkar Law are ready to help. Reach out to us today to discuss your options.
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