corporate litigation article

Corporate and Commercial Litigation: 5 Common Mistakes

It is inevitable businesses run into internal and external disputes. Those disagreements can escalate to lawsuits, otherwise known as commercial and corporate litigation.

Business-related lawsuits can be lengthy and complicated. The stress for those involved multiplies when you consider the legal costs of corporate litigation. However, using the legal system might be the only path to resolve your business disputes.

The corporate litigation process is filled with technicalities, formalities, and legal jargon. Mistakes in the legal process can lead to wasted time, and potentially paying some or most of another party’s costs. The negative impact of making such mistakes can be much worse depending on what is at stake in the dispute as well.

Described below are 5 common mistakes you should avoid in corporate and commercial litigation.

Corporate Litigation Challenges?

Corporate litigation can present complex legal challenges that require careful navigation. Achkar Law is prepared to guide corporations through disputes and litigation processes with strategic advice and support. Our balanced approach aims to protect your corporate interests and seek resolutions that align with your business objectives. Whether you’re dealing with contract disputes, shareholder issues, or other corporate litigation matters, we’re here to help.

1. Not Meeting Litigation Timelines

Under the Ontario Limitations Act, most corporate and commercial claims must be brought within 2 years of when the claim was or reasonably should have been discovered.

If someone files their claim too late, the defending party to the lawsuit can ask the court to dismiss the claim for failing outside the limitation period. The party that started their claim late then must show they had a good reason for not filing the claim within the prescribed limitation period.

Further, the Ontario Rules of Civil Procedure specify time periods for delivering, and filing documents, or taking particular steps. The consequences of not serving and filing documents within the time prescribed in the Rules can be severe.

For instance, as a defendant in a commercial and corporate dispute, you might be noted in default if you fail to serve and file your defense within the time limit mentioned in the Rules. You could end up being liable for everything being claimed against you in that case with no chance to defend yourself!

2. Improperly Drafted Documents

The first step in corporate and commercial litigation is the exchange of pleadings. A pleading is a court document in an action or application that states a party’s legal position for the dispute.

The Rules contain the requirements for pleading your case properly. Any mistake or breach of the Rules respecting pleadings can have severe consequences, such as being ordered to amend your pleading by the court or having your claim totally dismissed.
If you do not plead the relevant facts in the right way to support the kind of corporate or commercial claim you’re trying to make, a court may dismiss it and deny your requested remedies. For example, failure to plead the necessary elements of a corporate fraud claim can either delay your claim or get it dismissed entirely – even if you have a good case for fraud.

This is a procedural issue about pleading properly, not a matter of how strong your evidence and your case might be. A court will generally not examine your proof for your claims when addressing whether your pleadings are compliant with the Rules.

3. Starting the Wrong Action

As a party starting a lawsuit, knowing what specific legal claim for damages to bring in court is essential. Making the wrong move at the early stages can be fatal to your claim. For example, someone not doing what they promised could be mistaken for fraud, when it is better pleaded as a breach of contract.

For example, a common mistake in corporate and commercial litigation is when a shareholder brings an oppression action when a derivative action is more appropriate.

Shareholder oppression is the appropriate legal claim when an individual shareholder’s specific interests are disregarded as compared to other shareholders. Derivative actions brought on behalf of a corporation can be more appropriate if the harm suffered affects all the shareholders in the corporation.

This can be a big mistake when starting claims because then a court might dismiss some or all corporate and commercial lawsuits for not bringing the right action. There is also the possibility that down the line, the court determines a derivative action was more appropriate, and for that reason, a shareholder’s claim fails.

Pleading the right legal claims in corporate and commercial litigation can get confusing. If you plead the wrong type of claim for the remedies you’re seeking, you risk losing the case and losing the right to bring the proper claim later.

4. Not Providing Necessary Evidence

Another common mistake businesses make is not maintaining the proper documentation or keeping records for their claims. While witness testimony is valuable evidence, it is always better to have physical proof for your claims.

Some examples of documents that might be relevant for corporate and commercial litigation include contracts, emails, texts, corporate filings, receipts, share certificates, valuations, and financial records.

Many corporate and commercial disputes require analysis of these documents to determine the rights and obligations of the parties to the dispute. It’s important to disclose anything that’s relevant to the legal proceeding in accordance with the Rules.

Failure to maintain a proper documentary record or produce relevant documents under the Rules can have severe consequences for your claim. Depending on the circumstances, failure to produce the right documents can be the difference between winning and losing in corporate and commercial litigation.

5. Consulting a Lawyer Late in the Process

Navigating the legal process and all its rules can be confusing for self-representing parties.  It requires careful analysis of documents, statutes, and legal principles. It also requires legal strategy, advocacy, and specialized negotiation skills.

A corporate and commercial litigation lawyer is the best equipped to help a business avoid pitfalls in the legal process or resolve its business disputes. They can maximize your business’s chances of success and help negotiate resolutions in corporate and commercial litigation.

Some businesses decide to go as far as possible in the litigation process without talking to a lawyer to save on legal costs. While that might seem cost-effective in the short term, it can cause costly issues for your legal matter that could have been avoided with the less-costly advice of a litigation lawyer.

The earlier a corporate and commercial litigation lawyer is consulted about a business dispute, the easier it is to prepare and frame the issues in a claim or a defense to a claim. The lawyer can help you negotiate without having to even go through the legal process, plead your case properly if you must sue, and ensure you go to trial with the best possible case.

Hiring a corporate and commercial lawyer sooner rather than later can help maximize your chances of success in a lawsuit. Depending on what’s at stake, the cost of the lawyer’s help is usually outweighed by the benefit of their expertise in corporate and commercial litigation.

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Corporate  disputes are almost inevitable in the modern business world. You can start corporate litigation when you need to escalate that dispute to legal action.

Litigation can be highly technical. A small mistake early in the case can have costly implications. The five common mistakes described in this article are some examples but are far from the most severe that can occur in more complicated matters.

No matter how you look at it, consulting and retaining a corporate lawyer early to assist with your high-stakes business disputes lowers your risks and increases your chances of success.

Further Reading

Contact Achkar Law

If you need assistance with your corporate litigation, our corporate litigation lawyers at Achkar Law can help.

Contact us by phone toll-free at 1 (800) 771-7882.

Facing Corporate Litigation Challenges?

Corporate litigation can present complex challenges that require careful navigation. Achkar Law is here to support businesses with informed legal guidance on corporate disputes, contract issues, and other litigation concerns. Our goal is to provide strategic solutions that protect your business interests and facilitate a positive outcome.