Paying Attention to the Essentials in Litigation

In any due diligence process we recommend a thorough analysis of the target company’s current and prior litigation. A complete review of litigation can provide critical insights that may make or break the success of a future partnership.

We recommend seeking at least the following for an executive or the company:

  • Are they often litigious with former business partners?
  • How often do they protect their intellectual property by suing alleged infringers?
  • Do employee harassment suits run rampant?
  • Do executives have personal ‘dirty laundry’ aired publicly through litigation?

We suggest analyzing:

  • Volume of Litigation. If the subject is accused of breaching contracts several times, take a close look at what the plaintiff alleges. Some lawsuits come as a part of doing business, while others have valid concners behind them. Determine if the court found an executive was indeed culpable.
  • Nature of Disputes. When employees allege age and sexual discrimination, many instances might be legitimate. But others turn out to be opportunities for former employees who actually did not perform well on the job to get compensation after leaving.
  • The end result. See what the judge says in response to motions to dismiss, whether the judge said the original claims were not justified. Or, after a settlement, if possible and appropriate, find out from the opposing party what ultimately happened. We recommend discretion so that the subject does not learn about the investigation.
  • Personal Matters. When divorces name the subject, scour the papers for any embarrassing allegations against your subject, such as abuse or fraud.
  • Litigation Strategy. See how often the subject quickly settled litigation rather than letting it draw out or actually taking it to trial. This often shows a tolerance for controversy and conflict.
  • Overly Litigious? And keep in mind that a long string of lawsuits – even if the parties settled them – can mean that your potential partner might be somebody who has a modus operandi of getting into disputes and then handling them in court, having a hard time finding win-win situations outside of court.