Preparing for a commercial dispute before litigation begins

Commercial disputes rarely begin with a complaint. They begin earlier — an invoice goes unpaid, performance slips, a partner stops responding, a departing employee takes something with them. There is usually a period, sometimes months long, in which the disagreement is serious but no one has filed anything. What happens in that period tends to shape the case more than any decision made afterward.

Preservation is the one genuinely urgent step

Once litigation is reasonably anticipated, the obligation to preserve relevant records generally attaches — before a complaint, before a demand letter, sometimes before a decision to pursue the matter has been made. In practice that means suspending routine deletion for the documents, email and messaging that relate to the dispute, and telling the people who hold that material to stop deleting it.

This is worth doing early and thoroughly. Modern businesses generate relevant material across systems nobody thinks of as records: chat platforms with retention policies measured in weeks, personal devices, shared drives, notes applications, ticketing systems. Disputes about lost records can become their own proceeding, independent of the underlying claim, and they are entirely avoidable.

The corollary is that everything preserved is potentially discoverable. Communications written during this period should be written with that in mind.

Assess the case as a commercial decision

A pre-suit assessment answers four questions: what is the realistic range of outcomes on the merits; what is the realistic range of recovery or exposure; what will it cost to reach each stage; and what does the other side want. Only the first is a purely legal question.

The cost estimate should be staged rather than global. What does it cost to get through pleadings and an early dispositive motion? Through document discovery? Through depositions and expert work? Through trial? Most disputes resolve before the later stages, and knowing the cost of each stage lets a company decide where it intends to stop.

Management time belongs in this analysis. Discovery obligations, document collection and depositions fall on the people running the business, usually the ones with the most context and the least spare capacity. That cost is real even though it does not appear on an invoice.

Read what was actually agreed

Before assessing the merits, locate the governing documents — the contract, its amendments, purchase orders, and any correspondence that changed how the parties operated in practice. Several provisions can determine strategy before the substance is reached:

• A forum selection or governing law clause fixing where and under what law the dispute proceeds.
• An arbitration clause, which may make the process private, limit appeal, and change the cost profile substantially.
• A notice-and-cure provision requiring a specific notice before a claim can be brought.
• A mandatory mediation or escalation step that must occur first.
• A contractual shortening of the period in which a claim must be brought.
• A fee-shifting clause changing who pays if the matter is litigated to a conclusion.

A notice-and-cure requirement that was not followed can be fatal to an otherwise sound claim. These provisions are worth checking first, not last.

Define what resolution means

Payment, a clean separation, an injunction stopping specific conduct, and a defensible precedent are different objectives. They lead to different strategies, different timelines and different costs, and pursuing several at once usually achieves none of them well.

Choosing the goal early also clarifies whether early resolution is attractive. A company that primarily wants to be paid may accept a discount to be paid soon. A company facing a pattern of similar claims may reasonably decline the same offer.

Consider the pre-suit approach

A well-constructed demand letter can resolve a matter, narrow it, or produce information about the other side's position. It also communicates that the company is prepared, which affects how the dispute is handled from that point.

It carries trade-offs. It removes surprise, may prompt the other side to file first in a forum of their choosing, and starts the clock on their preparation. Whether to send one — and how much to say — is a strategic decision rather than a formality.

Keep the business running

A dispute with a customer, supplier or former partner usually sits inside a live commercial relationship. There may be ongoing obligations to perform, other contracts with the same counterparty, or a reference relationship worth protecting. Decisions about the dispute have consequences on the commercial side, and the two should be made together rather than in sequence.

None of this requires a filing. It requires an early, honest assessment of what the dispute is worth, what it will cost, and what resolving it should look like — which is the same discipline applied to any other significant business decision.