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The importance of a ‘war chest’ when in business

On behalf of Kadish & Associates Law Group posted in Business Litigation on Tuesday, June 30, 2015.

If you are not making money, you are not really in business. This is the mantra that most small business owners live by. After all, this is what really matters to such owners. So when the threat of a lawsuit is thrown around by a disgruntled customer, or a competing business decides to sue, it becomes quite difficult to resolve the legal issue. As such the court will do what it can within its power to get the parties to settle.

Despite these efforts, one party may insist that it have its day in court and pursue its right to damages and fees. Even if it did want to settle, it would be for as much as it were entitled to under the law (so there would not be much incentive to settle anyway.)

If you believe that you are being sued unjustly, or you believe that the claims have little likelihood of success, the fighting the charges to their conclusion would be appropriate. However, legal battles can be very expensive, and it may seem like a business that is being sued is basically being extorted for money.

Because of this, it is important for small businesses to have what is called a “war chest.” This is a specific fund or an amount of money set aside to defend lawsuits. It is better to have the resources to pay for legal counsel to defend meritless lawsuits than to pay a “legal ransom” just to make such a lawsuit go away.

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