Why is it important to avoid litigation?
Asked by: Aliya Braun | Last update: December 1, 2025Score: 5/5 (24 votes)
Litigation is expensive. It can impact your business's bottom line, your reputation and your emotional well-being. Bringing and defending lawsuits can cost tens of thousands of dollars even before the case goes to trial.
Why are litigation holds important?
A litigation hold is a written directive advising custodians of certain documents and electronically-stored information (“ESI”) to preserve potentially relevant evidence in anticipation of future litigation.
How does litigation affect a business?
The impact of litigation on businesses goes well beyond the purely financial impact of legal fees and damages. Most small business owners are invested personally in their businesses; litigation causes not just financial loss, but also substantial emotional hardship, and often changes the tone of the business.
Why is it important to preserve documents for litigation?
Failure to properly preserve evidence can result in serious consequences in legal proceedings, such as adverse inferences or legal sanctions. Therefore, it is critical that individuals and organizations involved in litigation understand and adhere to the principles and best practices of evidence preservation.
How can you reduce the risk of litigation?
- Encourage Clear Communication. ...
- Foster a Culture of Respect and Fairness. ...
- Maintain Accurate and Updated Documentation. ...
- Preserve Proper Financial Records. ...
- Implement Proper Risk Management. ...
- Conduct Thorough Due Diligence. ...
- Implement Clear and Enforceable Contracts.
Dan's Top Five Ways to Avoid Litigation
What are four ways an individual can avoid litigation?
- Be Nice. Businesses thrive or fail based on their reputation. ...
- Gather and Organize all the Information – The Good, the Bad and the Ugly. Facts take time to develop. ...
- Be Prepared. ...
- Work with the Right People. ...
- Enter Into the Right Agreements. ...
- Proper Insurance Coverage. ...
- Write a Letter. ...
- Don't Give Up.
Why is litigation risk?
Key Takeaways. Litigation risk is the risk an individual or company will face legal action. This legal action could be the result of the individual or company's products, services, actions, or another event. Large companies are especially susceptible to legal action given the large potential reward for plaintiffs.
Why is it important to keep documents safe?
Keeping documents secure is vital for disaster prevention, sensitive data, and GDPR compliance. It means you can always access your business-critical information. It is easy to misplace a file in an office setting which can lead to a breach of GDPR.
How long should legal files be kept?
This is consistent with a California Rule of Professional Conduct which requires an attorney to maintain all records of client funds and other properties that the client provided to the attorney for at least five years.
What is the importance of a cause of action to the litigation process?
It represents the legal grounds on which a plaintiff can bring a lawsuit against a defendant. A cause of action must include a legally recognized harm or injury caused by the defendant's actions or failure to act, as well as the necessary elements to establish liability, such as duty, breach, causation, and damages.
Why do companies avoid litigation?
Litigation can easily drain your business's finances, tarnish your reputation, and cause emotional distress. Legal battles aren't just about attorney fees; they can also divert attention from your core operations and dampen team morale.
What happens if a case goes to litigation?
The attorneys will present arguments, evidence, and witness statements. The judge will then rule on objections and motions and the judge and/or jury will provide a verdict. Litigation is complicated and extensive preparation is required.
What are the positive effects of litigation?
Pros: Legal Precedent: One of the benefits of litigation is legal precedent. Similar cases in the future can refer to these rulings, which creates predictability in law. More Structured: The litigation process offers a structured environment that follows specific rules and protocols.
What is the purpose of a preservation order?
A preservation letter may also be called a preservation order, a litigation hold, or a hold order. This is a letter instructing the recipient not to destroy, alter, or delete any documents helpful to the sender. This letter is critical in today's world where most documents are electronically stored.
What is the role of litigation hold?
A Litigation Hold in Office 365 preserves all mailbox content, including deleted, original, and modified versions of items for the purpose of eDiscovery for legal purposes.
What is the ultimate goal of litigation?
Litigation is generally thought of as the process of resolving rights-based disputes through the court system, from filing a law suit through arguments on legal motions, a discovery phase involving formal exchange of information, courtroom trial and appeal.
What records should be kept permanently?
Legal documents. Vital records (birth / death / marriage / divorce / adoption / etc.) Retirement and pension records. Investment trade confirmations and statements that indicate buying and selling.
How long is a legal document valid?
Notarized documents will remain valid indefinitely unless there are specific laws or regulations that stipulate an expiration date and require them to be renewed. In these cases, re-notarization is advisable if not legally required.
Do lawyers keep records?
Q: How Long Should an Attorney Keep Client Files in California? A: Depending on the type of case, client files should be kept for 5-10 years. For civil cases, important papers or property should be kept for a minimum of five years after closing the case, according to the California Rule of Professional Conduct.
Why is it important to keep records?
You need good records to monitor the progress of your business. Records can show whether your business is improving, which items are selling, or what changes you need to make. Good records can increase the likelihood of business success.
What are the three main types of records?
There are four types of records: official records, transitory records, non-records, and personal records. Some records are kept for a short amount of time, and some records have long retention periods.
What are the 8 principles of record keeping?
The 8 Principles are: Accountability, Transparency, Integrity, Protection, Compliance, Accessibility, Retention and Disposition. These are the “Principles” of good management of Records. ISO 15489: Records management is a globally recognized requirement.
What is the threat of litigation?
A legal threat is a statement by a party that it intends to take legal action on another party, generally accompanied by a demand that the other party take an action demanded by the first party or refrain from taking or continuing actions objected to by the demanding party.
What is litigation damage?
In civil cases , damages are the remedy that a party requests the court award in order to try to make the injured party whole. Typically damage awards are in the form of monetary compensation to the harmed party. Damages are imposed if the court finds that a party breached a duty under contract or violated some right.
What is litigation against you?
Contrary to what you may believe, litigation is not just another word for a filed “lawsuit”. Litigation is a term used to describe legal proceedings, following the filing of a lawsuit, between two parties to enforce or defend a legal right through a Court supervised process.