Small Business Lawsuits are a Common Occurrence
Business lawsuits, in general, are nearly an everyday occurrence. They run the gamut from contract disputes to discrimination. But here I want to address five of the most common small business lawsuits.
Before doing so, you should be aware, as a small business, how frequently lawsuits happen. A compilation of statistics by The Zebra shows:
- Business litigation impacts 36% to 53% of small businesses annually.
- Roughly 45% of small companies are in litigation.
- 90% of all companies experience a lawsuit at some point.
- Small companies face 12 million contract lawsuits annually.
Consequently, the more you're aware of the challenge, the better able you'll be to safeguard your business. Whether you have internal counsel or a commercial litigation attorney on speed-dial, a trusted legal resource is critical.
An attorney can provide counsel to minimize the potential for business disputes. And when the inevitable strikes, they can help guide you through the litigation process.
Commercial Lawsuits vs. Civil Lawsuits
Both types of lawsuits share similarities relating to legal procedures and remedies. However, their underlying causes and contexts differ significantly, highlighting the diverse legal landscape businesses must navigate.
Commercial Lawsuits
The most common small business lawsuits involve commercial lawsuits. Commercial litigation is civil litigation involving companies’ business interests as opposed to individuals pursuing consumer, household or personal claims.
Commercial lawsuits typically involve disputes arising from business transactions, contracts, or commercial relationships. These may include breach of contract claims, business torts, or conflicts over intellectual property rights.
Commercial lawsuits focus on resolving commerce, trade, or business operations conflicts. Generally, they involve parties seeking financial damages or specific performance remedies.
Civil Lawsuits
Civil lawsuits cover cases involving a broader range of legal disputes unrelated to commercial activities. These may include personal injury claims, property disputes, or family law matters.
Civil cases can involve individuals, businesses, or other entities. They seek various forms of relief, such as compensation for injuries, injunctions, or declaratory judgments.
The 5 Most Common Small Business Lawsuits
Businesses face many lawsuits, from contract disagreements to employee disputes and claims of intellectual property theft. Business litigation lawyers can help devise the best strategy for handling disputes.
The five most common small business lawsuits include:
1. Breach of Contract
Contract disputes, notably breach of contract, are generally the most common business-directed lawsuits. These suits can involve failure to deliver goods or services as per the contract or damaged goods. Contract issues can also involve failed payments or revealing trade secrets.
2. Discrimination
Small businesses can face discrimination lawsuits from employees and customers. More employees are suing their employers, mainly from increased enforcement by the Equal Employment Opportunity Commission (EEOC).
The most common employee discrimination claim is retaliation, representing more than half the cases. These cases can extend to disability, race, sex, age, equal pay, etc.
3. Wage Payment and Collection Law
Wage and hour laws can be local, state, or federal. Employees can file lawsuits against employers who violate any of these laws. Many lawsuits are about employers not paying enough money or extra money for hourly workers. Sometimes these cases involve bonus or commission disputes.'
Pennsylvania has one of the country's strongest Wage Payment and Collection Laws (WPCL).
4. Torts
Businesses often find themselves embroiled in tort lawsuits. They involve claims of wrongful acts that harm individuals or property. These lawsuits can arise from various scenarios:
Slip and fall accidents
Product liability claims
Negligence in providing services
5. Ownership Disputes
Partners, stockholders and other owners can disagree about purchase or sale agreements, bylaw violations, or compensation issues. While most partners would not expect to have a dispute when starting, these lawsuits are common in the business world.
Types of Businesses Facing These Lawsuits
Litigation affects businesses of all sizes. It might seem logical to assume larger corporations with expansive operations and deeper pockets are the prime target.
But as you've seen from the statistics, small and medium-sized Business (SMBs) are not exempt from lawsuits. And unlike larger corporations with in-house legal representation, small businesses have fewer resources. That makes handling legal issues even more challenging.
Your likelihood of a lawsuit varies based on numerous factors. But some industries are more susceptible than others. Common targets include:
- Construction
- Healthcare
- Service
- Technology
- Retail
- Manufacturing
So, if you own a business in one of these sectors, you'll want to prepare yourself to address common small business lawsuits.
Work with an Experienced Team of Business Litigation Attorneys
Our law firm works with companies in Bucks, Chester, Delaware, and Montgomery counties and represents nationally based businesses. Give us a call for assistance.
Michael A. Luongo, Esq. is a Bucks County attorney in the firm's business litigation, municipal, and criminal defense practices. Michael defends depositions, drafts and argues various motions, and serves as first and second chair in complex trials.