Both reputational and monetary damages can clearly be a deterrent to reckless litigation. But on balance, is the risk the same for both parties involved? At the end of the day, as much as an ill-received lawsuit can harm a company, the cost of being the target of legal action is generally far higher than it is to pursue it. This is borne out in every metric for how litigants may be adversely affected by a lawsuit, whether material or immaterial. In general, larger organisations – the kind that are most likely to resort to litigation in the first place – are generally much better-placed to do so, having the resources and connections necessary to retain effective attorneys. For smaller organisations, whose best hope for success in a lawsuit is to avoid becoming involved in it, the fees accrued from defending themselves against legal action pose much more of a financial threat. This is obviously exacerbated if the lawsuit is unforeseen, while the plaintiff has the benefit of advance preparation. Even reputational harm is often less of an issue for the litigating party, as many examples demonstrate. When Ford Motor Company infamously responded to concerns about the safety of its Pinto model by defending itself against incoming lawsuits rather than improving the design, it suffered reputational damage that is still used as a study in corporate recklessness to this day. There are far fewer historical cases in which the ‘aggressors’ in litigation fared as poorly. For the largest companies, legal disputes need not even be a barrier to future cooperation; Nokia’s 2016 patent infringement claim against Apple, for which the Finnish telecom company received $2 billion when Apple agreed to settle, did not prevent the two giants from agreeing to collaborate on further R&D projects that same year. This paints a rather intimidating picture for companies that do not have the resources to match corporate giants when it comes to pursuing or settling legal cases. With the balance of risk evidently leaning towards plaintiffs in most cases, even smaller organisations and individuals are better served looking to their defences far in advance of any such trouble arising. Hence, the need for SMEs to avoid neglecting their legal counsel remains as strong as ever. SPECIAL FEATURE 31 “The cost of being the target of legal action is generally far higher than it is to pursue it.” Risks For Defenadants
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