7 Lessons I Learned from Fighting a 9 Month Long Lawsuit

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Have you ever heard entrepreneurs talking about lawsuits? Yeah me neither. It’s mostly because entrepreneurs like to talk about glory moments and lawsuits aren’t that sexy. Not to mention there is a lot of legalese that may restrict folks from talking about details. Recently while talking with a friend, I shared some of the lessons I learned from fighting a 9 month long lawsuit. After the conversation, I thought several others may find these helpful as well.

As an entrepreneur, you often find yourself solving problems that have no easy answers. Problems that you weren’t trained to solve in college. Facing a lawsuit is one of those scenarios.

I spent majority of last year fighting a lawsuit for one of my companies. Yup most of my friends did not know about it.

While I won’t go into the exact details of the terms due to our settlement restrictions, I think there is plenty you can learn from my experiences and the lessons that I learned.

Disclaimer: This is for informational purposes only. I’m not a lawyer, and nothing I say in this article should be considered legal advice.

Now that the disclaimer is out of the way, here are the 7 lessons that I learned from fighting a lawsuit.

1. Lawsuits are Expensive

If there is one thing you should know about lawsuits is that the system really doesn’t care about right and wrong.

It’s often unaffordable to fight right and wrong – sometimes the cost simply doesn’t make business sense.

That’s why majority of lawsuits settle prior to trial. Usually there are several options that you can explore to resolve / settle the case.

Sure there is an option to recover legal fees, but that’s not a guaranteed option.

Your goal should be to find an outcome that makes the most business sense.

2. It’s all about giving and taking

Assuming that you do not have an unlimited cash reserve, you are going to have an out of court settlement.

One of the best advice I got during the lawsuit was:

Like any compromise, it’s all about giving and taking. It usually works out well when you leave your ego out of the way.

If it helps, then keep reminding yourself that your goal is to find an outcome that makes the most business sense NOT to prove that you’re right.

Even though I knew I was right, it would’ve cost us several hundred thousand dollars to prove that in court.

In the beginning, I was stubborn and wanted to make a point despite the cost – after all I’m an entrepreneur and I want to win.

Thankfully my advisers and lawyers helped remind me that I was letting my ego come in the way, and I should look at options that makes the most business sense (settlement).

For those who’re stubborn like me, remember that just because you settled doesn’t mean that you lost. If you come out financially better, then it’s a WIN.

3. Get a competent lawyer

You need to have a good business lawyer regardless of whether you’re in a lawsuit or not. Get one NOW!

Also don’t make the biggest rookie entrepreneur mistake: trying to save money on professional advice. There is nothing more expensive than a cheap lawyer or accountant!

An experienced business lawyer will greatly impact the outcome of your lawsuit.

I’m glad that I had great lawyers from the beginning who knew our business inside out. They also had a personal connection with me due to my other businesses, so I knew that I wasn’t going to be ripped off. I’m very thankful for our awesome legal team.

In my experience, you can find the best lawyers from referrals.

I completely agree with this quote by Gavin Rossdale:

4. Remain Calm

Meditate to stay calm

If you’ve never been a war-time CEO, then the lawsuit is going to bring out a lot of emotions in you.

Deal with your emotions upfront however you need to. Cry, talk to your friend, go for a run, meditate, do whatever you need to do!

You have to stay calm during the negotiations and in front of your team.

This is the only way you will be productive while managing your company and dealing with a lawsuit.

5. Focus on Your Revenue

You should always focus on your revenue regardless of a lawsuit, but it becomes extremely important when you’re going through a lawsuit.

You must be financially strong in order to stand a chance against the opposition.

During the lawsuit, I was the only person dealing with legal issues. This made things easier for everyone because the rest of the team focused on improving the product and growing our business.

The threat helped us focus and worked extra hard which allowed us to stay financially strong through out the process without losing our market edge.

Once it was all over, we came out a lot better than what I had projected our end of year growth to be.

6. Be Extra Frugal

I cannot stress the importance of financial stability when dealing with a lawsuit.

You will have expensive legal bills every month. It’s crucial that you have a solid cash reserve.

Try to find ways to cut unnecessary business expenses (trust me you’ll find them).

7. Prepare for the Worst with Everything

Not sure why this is, but sh*t always happens at the worst times.

You should almost assume that if anything that can go wrong, will go wrong.

An employee may quit abruptly without any notice due to a family situation that you have no control over. A deal that you had in works for several months may fall because your contact at the company switched jobs.

People in your industry that you have known for 5+ years who you call friends may completely screw you over due to unforeseen circumstances.

Yup all of those things happened – and none of them were expected.

Basically you need to prepare for the worst and hope for the best with everything (not just the lawsuit).

Also don’t let the adversity bring you down rather use it as a motivation to keep working harder.

Final Thoughts

I spent a little over 9 months dealing with lawyers, reading long and complicated legal documents, all while trying to run 10 different companies.

It’s was a challenge and a new learning experience. Thankfully I had a very solid legal team and talented advisers who helped me through the process.

I cannot be more thankful of my team who continued to work hard and keep pushing to make things better.

Last but not least, I was able to channel the negativity and use it to fuel my motivation and work even harder than I normally do. If you can do that, then you will be unstoppable.

Whatever you do, DO NOT GIVE UP.

I hope you found these insights helpful. If you liked this article, then let’s connect on Twitter and Facebook.

If you have a question or insight that you want to share, then please leave a comment below.

Please note that due to legal restrictions of the settlement, I’m unable to disclose a lot of the exact details of the lawsuit.

Please note: I reserve the right to delete comments that are offensive or off-topic.

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16 thoughts on “7 Lessons I Learned from Fighting a 9 Month Long Lawsuit

  1. Thanks for sharing this Syed, I can only imagine how challenging those 9 months were.

    I thought you ran 3 companies and was impressed by that, but now you mention that there are 10. Wow! Would definitely love to know what the others are and how you manage to stay on top of things.

  2. Syed I appreciate the info you share and the way you present it. I never considered myself an entreprenuer but I am now building a business of my own. By its very nature it will remain small, but there is potential for huge profits, and for impacting many individuals in the most wonderful ways. It’s a little rough ATM but check out my page if you get a chance – tasmantarot.com

    :)

  3. What a great post! Why don’t online entrepreneurs talk more about legal issues and the other pitfalls of doing business online? The vast majority of internet marketing ads are about how easy it is to make money online if you just “buy my stuff”. You see a lot of training on products and tools but not a lot on business plans and strategies. No wonder more than 95% of would-be online businesses fail: they don’t have the knowledge they need for a good business foundation. Thanks for sharing the insights from your recent experience–honest and thought provoking.

    • Thanks for reading and leaving a comment Greg. I really appreciate it.

      I wish more entrepreneurs talk about pitfalls and failures rather than glory moments :)

    • I agree. No one should start a business without good advice and I do not mean listening only to the person selling you something. I’ve spoken to many Internet wannabees who do not consider local work-at-home laws or business licenses. One sad case was someone forced to move from their rental residence of many years because the lease prohibited running a business from the property.

  4. Hey Syed,

    Yeah, I hear you that lawsuits are no fun. However, in business it’s one thing that we just have to deal with.

    As my business grows more and more I am considering getting business insurance. Kind of lost on where to go for it since I work from home, but I do want to be prepared.

    Garen

  5. Hey Syed sir,

    It was amazing learning experience from your fight. To be very frank, I never came across such legal stuffs – perhaps because my business has yet to grow or I have yet to commit mistake(s). :)

    I imagine how could you manage your business while going through those 9-months tough phase. But I guess, “DO NOT GIVE UP” is that punch line which kept you moving.

    Am I right ?

  6. That is really inspiring! The best point i liked is “do not let ego come in your way” and other 2 points, no less important, are: maintain calm and go frugal! But if we put more stress on the first point, that is most important!

  7. This is tosh. What got you into trouble in the first place, what did you learn from it and how do you negate the issues and outcomes for the future?
    in the future.

    • It was a patent litigation case. We had a very solid case against it but see #1 lawsuits are expensive even when you’re right.

      We ended up settling on terms that we thought were fair for both parties. Lesson #2 it’s all about giving and taking.

  8. I’ve been advising business startups for many years. My advice is always – before making a business commitment – is buy an hour of time with a business attorney and a business CPA to discuss your venture. This is money well spent. Thankfully I did that and then signed on with each. Money paid them is small compared to money saved over the years. I want to be a positive thinker, but learned over time there is always a chance for a lawsuit or tax issue. Putting that aside my attorney and CPA are solid sources of information. They advise me well. Best wishes Syed and thanks for airing your situation. My hope is others take your experience to heart.