Top 5 Mistakes Companies Make During Commercial Litigation

Navigating commercial litigation in New Jersey can be a complex and high-stakes endeavor for any company. A legal dispute can distract from core business operations, drain financial resources, and even threaten a company’s reputation. Unfortunately, many businesses, even sophisticated ones, make common missteps that can significantly weaken their case and drive up costs.

The New Jersey Commercial Litigation Lawyers at Herold Law, P.A. have seen these mistakes repeatedly. Here are the top five pitfalls companies should be vigilant to avoid:

1. Failing to Preserve Critical Evidence (E-Discovery Missteps)

In modern litigation, evidence is not just paper—it’s everything from emails and text messages to corporate databases and cloud documents. A company’s failure to immediately impose a litigation hold upon anticipating a lawsuit is perhaps the most dangerous and costly mistake.

• The Mistake: Allowing the routine destruction or deletion of emails, instant messages, or documents that are relevant to the dispute. This can include failing to halt automatic data deletion policies.
• The Consequence: Courts in New Jersey take the spoliation (destruction) of evidence very seriously. It can lead to sanctions, monetary fines, and, most damagingly, an adverse inference instruction to the jury, which means the jury is told to assume the destroyed evidence would have been unfavorable to your case.
• The Fix: Work with your legal counsel immediately to issue a comprehensive, company-wide litigation hold that is strictly enforced across all departments and data systems.

2. Delaying Action and Legal Consultation

Time is a critical resource in litigation, and delays can severely limit a company’s options. Many businesses hesitate to contact a lawyer until they are formally served with a lawsuit, often believing the issue might simply “go away.”

• The Mistake: Waiting until a formal complaint is filed or a key deadline is looming before seeking experienced legal counsel.
• The Consequence: New Jersey’s court rules have strict deadlines for filing responses, discovery, and motions. Missing these can result in a default judgment against your company or the loss of important legal defenses and counterclaims. Furthermore, an early consultation might have revealed opportunities for a favorable, low-cost resolution through negotiation, mediation, or arbitration before the case escalated.
• The Fix: Consult with an experienced New Jersey Commercial Litigation Attorney at the first sign of a serious dispute—whether it’s a formal demand letter, a breach of contract, or a simmering partnership conflict.

3. Communicating Improperly Outside of Counsel

Once a lawsuit has begun, every email, text, and social media post related to the dispute is potential evidence. Business principals often damage their own case by attempting to resolve the matter directly with the opposing party or venting their frustrations online.

• The Mistake: Direct communication with the opposing party without your attorney’s consent, or discussing the case with employees, friends, or on social media platforms.
• The Consequence: Anything you say or write can be used against your company. An offhand, emotional remark can be taken out of context and presented as an admission of fault or evidence of bad faith, complicating the case and undermining your legal strategy.
• The Fix: Designate your attorney as the sole point of contact for the dispute. Instruct all employees, officers, and directors to cease all communication about the matter, referring all inquiries to your legal team.

4. Underestimating the Cost and Scope of Discovery

Discovery—the phase of exchanging information and evidence—is often the longest, most expensive, and most unpredictable part of litigation. Companies frequently fail to budget appropriately or staff the internal resources needed to respond effectively.

• The Mistake: Assuming your legal team can handle all document production without significant internal cooperation, or failing to anticipate the massive scope of electronic discovery review and production.
• The Consequence: Slow or disorganized responses to discovery requests can lead to court sanctions and the perception that your company is hiding information. Furthermore, a failure to properly vet documents before production can inadvertently release privileged or confidential information.
• The Fix: Be proactive. Work with your legal team to create a realistic budget and a dedicated internal team to manage the collection and review of documents, streamlining the process and maintaining control over the information being produced.

5. Letting Emotion Overrule Strategy

Business disputes are inherently stressful and often highly emotional, especially when they involve former partners, employees, or long-time vendors. However, allowing anger or a desire for retribution to dictate legal decisions is a classic mistake.

• The Mistake: Insisting on fighting a case to the bitter end—even when a favorable settlement is on the table—out of spite, or making decisions based on pride rather than the financial risk and reward.
• The Consequence: Emotional decision-making leads to protracted litigation, skyrocketing legal fees, and often a less favorable outcome than could have been achieved through a strategic settlement. Litigation is a business tool, not a battlefield for personal grudges.
• The Fix: Rely on the objective counsel of your New Jersey Commercial Litigation Attorney. A lawyer will provide a clear-eyed assessment of the case’s strengths, weaknesses, and potential costs, allowing you to make a rational, business-first decision about when to fight and when to negotiate.

Protect Your Business – Contact Our New Jersey Commercial Litigation Lawyers at Herold Law, P.A.

Avoiding these common mistakes is the first step toward a successful outcome in commercial litigation. At Herold Law, P.A., our New Jersey Commercial Litigation Lawyers will help you avoid these pitfalls. Call 908-679-5011 or contact us online for a consultation. We are located in Warren, NJ and serve clients across the state.

• Category: Commercial Litigation