By Jonathan Schmidt Law Column
Surviving in business is difficult enough without the threat of outside forces that may seek to harm your hard-earned place in this world. If you’ve had to engage in a long and hard-fought legal battle, you know it can be extremely stressful —and even if you accomplish the goal you initially set out to achieve with a lawsuit, it doesn’t mean your litigation efforts are over.
Lawsuits typically resolve with one of two different outcomes: you receive an order from the court requiring the party to do something (or refrain from doing something), or you receive a monetary award.
The dream scenario
Before discussing what happens when things don’t go as planned, let’s look at how things should work in an ideal world. If your opposing party respects the court and is willing to acknowledge the outcome that has been reached, the next step is for the losing party to abide by the court’s order and either follow its requirements or pay the money to which you are entitled.
If your case has resulted in a court order requiring the other party to abide by certain requirements or restrictions, and they do, then there is little that you will need to do on your end. If your case resulted in a monetary judgment, then you should expect to receive that payment from the opposing party with few logistical hurdles.
One thing you should be aware of in the event of a monetary payment is the possibility of tax consequences for the payment you receive. This depends entirely on the reason for the payment, and you will want to consult with a tax advisor directly to determine your reporting obligations to the IRS.
When payment doesn’t happen
While everyone hopes to receive their monetary award promptly after a lawsuit, this doesn’t always happen. You may have an opposing party who wants to make it as difficult as possible for you to collect, or who claims that he/she/it doesn’t have the money to pay. When this happens, you will need to take additional action.
Efforts to recover on a monetary judgment are known as “collection” efforts. Your existing business litigation attorney may be able to help you with the collection process or they may refer you to an attorney who specializes in collection.
Collection involves a variety of different legal tools that force the opposing party to pay you the money you are entitled to. Some of these collection methods are easy. For example, you can send notice of your award to the opposing party’s banks, employer (if one exists) or other parties that may be paying the opposing party money. These notices let individuals and institutions know that instead of paying the opposing party, they should be paying you.
These types of notices, known as garnishments, may allow you to collect a good amount of money. If your judgment is large, however, you may need to go after larger assets that a business or individual has in their possession.
Here the process becomes much more complicated, but you may be able to force the sale of the opposing party’s office space, physical assets, business or home. You may also be able to acquire valuable assets such as their intellectual property. You will have to work with the court on these efforts; you can’t simply show up and demand that physical assets be handed over to you.
When court orders are violated
If the outcome of your lawsuit was a court order requiring the opposing party to take certain actions or refrain from certain conduct, and the opposing party refuses to do what is required, then your efforts to enforce your judgment will be different.
Specifically, you will need to go back to the court and explain what is happening and ask the court to further enforce its order or punish the opposing party for their actions. How the court responds will depend on how they view the opposing party’s “nonaction.” The court may issue a warning to shape up and comply, or they may impose monetary sanctions. In the most serious of scenarios, a party can be held in contempt of court for failing to follow a court order, which can result in jail time or fines.
Throughout the course of the business litigation process, the goal is to get a client a successful outcome or resolution of a case. However, a litigator’s job does not end there. Even after a lawsuit is completed or an order handed down, your attorney should stick with you to make sure that the opposing party complies with the requirements of any judgment. •
Jonathan Schmidt is the principal attorney with 303 Legal, P.C. He practices in the areas of business and litigation. He can be contacted at jonathan@303.legal or www.303.legal.
