When Your First Startup Is Falling Down: 6 Rules To Survive Litigation And Land On Your Feet

While the growth numbers for startups may be steadily rising, business offers no guarantees. People getting together to form partnerships are often subject to all kinds of disputes and disruptions, leading to an eventual and sometimes bitter end. If this is happening with your first startup, you need to think and act quickly, not just to preserve your current business interests, but to protect your future. Keep the following in mind as you navigate these tricky and potentially devastating waters:

1. Litigation Is Not DIY Law

Even if your business dispute seems simple enough that it could be resolved without the assistance of attorneys, it likely isn't. Outside of minor, cut-and-dry small claims cases, nearly every party involved in litigation should be represented by business litigation lawyers. Even a "simple" dissolution of partnership in business carries short and long-term ramifications for both sides that require careful legal consideration. No matter what your dispute, have the representation you need to succeed.

2. There's No Place For Personal Feelings In A Court Room

You may have known your business partner(s) for years leading up to a dispute, having experienced the ups and downs of running the company and life in general, but when you reach the stage where litigation is needed, it's vital to set aside all personal feelings. Avoid having conversations where you might admit to some guilt or be persuaded to make concessions. During the discovery part of your case, conversations you've conducted, seemingly on a personal level, can be introduced and used against you.

3. You May Make Matters Worse By Contacting Other Parties

Despite having the best intentions, any attempts at communicating, be it verbally, electronically, or on paper, may also come back to haunt you in a business litigation case. No such attempts should be made without first consulting with your legal team and obtaining their stamp of approval. Most especially with concrete evidence, such as a copy of an email, the court may later view your words as an admission or implication of guilt. Let the lawyers do all of the talking, no matter how strong the urge to reach out yourself may be.

4. Bad-Mouthing Your Litigation Opponent(s) Usually Backfires

While you may feel personally slighted or that an injustice has been committed against you and your business interests, talking about it to anyone other than your legal counsel will likely backfire. Small talk made over lunch, at a bar, or on social media could later become the focus of your legal pursuits, making you look bad or even implicating you for libel or slander. People you may view as friends now could be persuaded to speak against you or they may be obligated to do so under oath, meaning you must exercise the utmost scrutiny in everything you say regarding the litigation.

5. You May Still Have Ongoing Business Obligations

If the business under litigation is still operational, you may be obligated to it in different ways. Depending on contractual and other agreements, you might need to work, attend meetings, or even pay the bills; failure to do so could actually result in further legal action either by your partner(s) or customers. Clear up this potential issue with your lawyer and fully understand what is required of you from here on out. The last thing you want is to worsen your legal stance and complicate your professional future.

6. You Can Still Pursue Your Entrepreneurial Goals

Just because your first startup ended up in litigation doesn't mean the end of your dreams as an entrepreneur. Take notes and be sure to learn as much as you can from the experience. Ask your attorney the meaningful questions that will help you pave the road to your next venture or find out how you might be able to save and rebuild your existing business on your own, if it's salvageable. Half of all startups fail by their fourth year; however; if you look at this as a character and knowledge-building event, there may be no stopping you in the future.


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