The Lawsuits I See Coming, and the One You’re Walking Into Now
After years litigating business disputes, you stop hearing new stories. A client calls, starts in on what happened, and within a few minutes I can usually see where it is headed, because I have watched the same handful of mistakes produce the same short list of lawsuits for most of my career.
The mistakes are never exotic. They are small, sensible-looking decisions that feel like good business in the moment, and they share one root. Every one of them is a bet that what you meant will matter more than what you did. It never does. A lawsuit is not an inquiry into your intentions. It is a reading of your conduct, and your conduct is read by strangers, from the outside, using only what you left behind. You do not get to narrate. The documents speak, and when there are no documents, the timeline does.
You trusted the handshake.
Two friends start a business on a handshake. One makes the product, one sells it, and they agree they are partners, which for two profitable years means whatever the monthly numbers happen to support. Then a large contract lands, or an acquisition offer arrives, and the word “partner” has to mean something exact. One remembers fifty-fifty. The other is certain it was seventy-thirty, weighted for the capital he put in. Neither thinks he is lying. Memory quietly rewrites itself on both sides once real money is at stake, and there is nothing outside the two of them to settle which version is true. And the fight rarely stays on the ownership split. It spreads to who controls the bank accounts, who owns the intellectual property, who can bind the company, and whether either of them can walk out and compete. An undocumented conversation can put the whole business in play. Litigation is an expensive way to reconstruct a conversation you could have written down for free.
You do not need a forty-page agreement on the first day. You need the terms that will be fought over later fixed in writing now, while everyone still agrees: who owns what, what each person is contributing, who decides what, how profits get distributed, who owns the intellectual property, and what happens when someone leaves, stops working, or believes the other has stopped carrying the load. If the deal is already moving, even a two-line email can expose a disagreement before you build a company around it. “Just to confirm, we are each in for fifty thousand, we own it equally, and the big decisions take both of us.” Send it before the disagreement hardens. If your partner writes back with a different version, you have found the dispute two years early, before either of you has built a life on a deal that never existed.
You gave it a name, and the name did nothing.
A delivery company calls its drivers independent contractors. The written agreements say so, and every driver gets a 1099. In practice the company assigns the routes, sets the hours, requires the uniforms, dictates how the work is done, and tells the drivers they cannot work for anyone else. One is let go, files a wage claim, and the investigation does not stop with him. It sweeps in every driver and reaches back years. The payroll savings were real. The back wages, taxes, and penalties that follow are much larger.
A signed agreement does not save you here, because the label at the top of a contract is just another thing you meant. The exact test varies by state and by which statute is being applied, but the core of it does not: the law does not read the noun you chose. It reads the verbs. If you set the schedule, supply the tools, and control how the work is done, the contractor label is in serious trouble no matter what the paper says. And this is not just a delivery problem. It reaches sales reps, consultants, designers, technicians, and the temporary hire who has now been in the same seat for three years. Audit the relationships you already have against how they function, and if you control the work the way an employer does, fix it as an orderly reclassification with employment and tax counsel, not a panicked round of terminations that becomes the next lawsuit.
You built a wall and leaned on it.
Forming the LLC took an afternoon. The protection it promises depends heavily on how you behave for the years afterward, and this is where owners quietly dismantle their own shield. They charge personal expenses to the company, move money in and out without recording why, sign contracts in their own names, and leave the business too thin to pay its bills. On paper the company is separate. In practice the owner uses it as a second checking account. When a creditor wins, cannot collect, and subpoenas the bank records, that gap becomes the entire argument: that there was never any real separation to respect. If it lands, the case stops being about the company, and the creditor starts reaching for the owners’ personal assets.
One sloppy month does not erase your protection, and the standard varies by state. Courts look at the whole picture, and commingled funds, cash stripped out, a company left undercapitalized, and contracts signed as if there were no entity at all are what build the case against you. So treat the entity as a real business, not an extension of yourself. Separate accounts and books, real capitalization, money in documented as contributions or loans and money out as draws or reimbursements, your name on contracts followed by your title. If the history is already messy, do not backdate anything or invent records. An accountant can reconcile the books and counsel can clean up the governance from here forward. The protection was never the certificate of formation. It was the conduct behind it.
You had reasons no one could see.
A manager finally fires an employee after years of missed deadlines and customer complaints. He does it two weeks after the employee asks for medical leave. The reasons are real and long-standing. They are also invisible, because none of them were ever written down. The file holds a few positive reviews written to avoid hard conversations, some vague comments, and a scatter of recent texts about absences. Read from the outside, that file supports a retaliation story more clearly than it supports the employer. This is the handshake problem again, in an employment file. The employer may be telling the truth, and the record does almost nothing to prove it.
Write down performance problems as they happen, and make them specific. “Bad attitude” tells a court nothing. “Missed the March, April, and May reports after written reminders and a final June 10 deadline” describes conduct someone can actually weigh. Let the annual reviews say what is true, too, because an inflated rating written to keep the peace becomes a weapon in the plaintiff’s hands later. When a hard termination is coming, and especially when the employee has recently taken leave, complained about pay, or reported misconduct, slow down and call counsel before you act. Depending on the facts, an honest improvement process or a properly structured separation agreement can reduce the risk substantially. A court cannot see what you never wrote down, and it will not take your word for what you would have written.
You wrote the exhibit yourself.
The worst version is the one you build with your own hands. A customer sues over a product that failed, and the case turns on what you knew before you shipped. Your warranty is careful and narrow and gives you a strong defense. But three months earlier you texted your operations lead, “let’s just ship it, we can sort out the returns later.” Every mistake so far has been a gap between what you meant and what you did. This one is different and worse: the damaging record is not missing this time, you wrote it yourself. A text message is testimony you gave before you knew you were a witness. The sender can add context on the stand, but the words are already fixed, and the other side will put them in front of the jury as many times as the judge allows.
Write every message as though it will be enlarged on a screen in a courtroom, because one of them might be. Do not joke about a defect, guess at facts you do not have, or give an instruction you could not defend under oath. And once litigation is filed or reasonably anticipated, do not alter or delete what already exists. Suspend any auto-delete, preserve the devices and accounts, and understand that clearing a message from your own phone does not reach the copies on other people’s phones or in the company’s backups. A bad message is usually easier to explain than a missing one. Destroying relevant evidence can bring sanctions, an instruction that the jury assume the worst, more discovery, and a credibility problem that infects the entire case.
The one lever left
By the time a lawyer is called, most of the damage is already done. The conduct has happened, the important documents already exist, and a litigator is working with facts that hardened months ago. I can investigate, attack the other side’s story, keep bad evidence out, and negotiate from whatever leverage is left. I cannot write the partnership agreement that was never signed, turn an employee back into a contractor, unwind years of commingled money, rebuild a personnel file, or unsend a text. The time to change the outcome is earlier: before the contract is signed, before the money moves, before the termination meeting, before you hit send. The businesses least likely to end up in my litigation practice are the ones that act in that window, when a short agreement, a candid conversation, or a quick call still costs almost nothing.
If one of these problems is already developing, the first job is to stop making the record worse. Do not send the angry email, move the money, fire anyone, or clean up the files before you get advice. Earlier decisions created the problem. The next one decides how bad it gets. I answer my own phone. Call me, and we will figure out where you actually stand.
