Contractual Disputes Can Adversely Affect a Business's Bottom Line

A large, publicly traded company - Express Scripts, Inc. - recently notified the Securities and Exchange Commission that it is involved in a contractual dispute with Indiana-based WellPoint, Inc. that may lead to litigation. WellPoint disputes the company's performance of its obligations under a contract the two parties entered into in 2009, and the two disagree about the interpretation of certain terms contained within that contract.

Although both parties are negotiating in an effort to settle their issues without litigation, neither can confirm that litigation will be avoided. WellPoint accounts for 30 percent of Express Script's annual revenue so there is a lot at stake as they attempt to resolve their situation.

The Cost of Litigation

Lawsuits can be very expensive and have the potential to drive a company into bankruptcy. Not only is there the mental anguish associated with a dispute, there are many costs involved, such as:

  • Man-hours incurred compiling and providing documentation
  • Litigation costs - e.g. court fees, depositions, travel, copies, mail
  • Time spent away from the business
  • Attorney fees
  • Award to the prevailing party
  • Penalties and fines incurred as a result of a lost lawsuit

As with any business issue, a company must always pay attention to what effect a particular dispute will have on its bottom line. If your company is facing a dispute, count the costs and decide whether this is a battle worth fighting. There are costs associated with every aspect of dispute resolution. Choosing the right avenue can often make or break your business.

If your company is thinking of raising an issue or is defending itself from a possible dispute, the assistance of a business attorney can be of utmost importance. A lawyer who has an in-depth understanding of corporate law and civil litigation can help you decide whether to pursue:

  • Mediation
  • Arbitration
  • Litigation
  • Resolving the situation by withdrawing from the dispute

A corporate dispute, no matter which way it is resolved, affects a company where it can hurt the most: its pockets. A successful resolution sometimes does not mean winning - as most people define the word - but can mean maintaining the black in your company ledger.