Certain aspects of owning a company are not all that attractive. Right off the top is the matter of trying to collect debts from customers struggling to pay. What business owner wants to have to battle to get paid? And when that battle seems to be lost, suing a customer might be the only remaining option.
Suing customers is sometimes necessary. However, civil litigation is rarely a good thing. Litigation always has the potential of making a bad situation worse. For business owners, considering civil action against a customer is a lot like trying to choose the lesser of two evils.
Litigation Costs Money
Among the many concerns that come with suing customers is the cost of doing so. Companies need to pay their attorneys. They need to pay court costs. Winning a judgment allows a company to add its expenses to the debtor’s bill, but there are never any guarantees that said customer will actually pay even after losing the case.
In simple terms, winning never guarantees payment. A judgment is a court decision determining the winner and loser in a civil case. But a civil court cannot force a judgment debtor to pay in the same way a criminal court can send a convicted felon to prison. Civil litigation doesn’t work that way.
Companies run their very real risk of paying a lot of money to win a civil case, only to never recover what they have spent from a debtor who manages to avoid his financial responsibility indefinitely. Judgment Collectors, a Utah judgment collection agency based in Salt Lake City, says this sort of thing happens all the time.
Litigation Can Damage One’s Reputation
Another thing companies need to consider is their reputations within their respective communities. Why? Because civil litigation can damage a company’s public reputation even if that company is absolutely in the right. It is a risk that needs to be considered.
Unfortunately, the culture seems to have a natural bias against businesses regardless of their size and scope. In disputes between companies and their customers, public opinion often falls on the side of the customer. It is just assumed that businesses should be willing to take their losses and be quiet about it. Small business owners are especially attuned to the fact that taking one’s losses too many times can mean going out business.
A company looking to sue one of its customers must weigh the benefits of winning against any possible damage to its public reputation. Could the company lose some customers as a result of its lawsuit? And if so, are such losses worth it?
Litigation Can Be Stressful
Financial and reputational losses aside, civil litigation can be stressful as well. Filing a lawsuit requires following certain procedures. It requires adhering to deadlines. Once a case is filed, discovery takes place. There are endless consultations with attorneys. And through it all, company owners can feel guilty about suing their customers. They can feel like the heavy, so to speak.
That kind of stress can be difficult to deal with. Company owners can be tempted to just give in and take the easy road just to get the case over with. And when that happens, a lawsuit tends to accomplish very little. It may ultimately end up not having been worth filing to begin with.
None of this is to say that company should not seek legal remedies when customers don’t pay their bills. Lawsuits are sometimes the only way to resolve issues. But that doesn’t make civil litigation a pleasant experience that creates smiles all around.