In today's video, I will introduce you to Jack, Janet and Chrissy. They each own one third of --- and are employed by --- an LLC that operates a successful business. In this business story, Jack and Janet tire of Chrissy and undertake to freeze her out of the business.
Janet removes a computer that contains data necessary for the day-to-day operations of the business from the office.
Chrissy promptly fires Janet and notifies the police that a former employee stole a company laptop. Janet admits to taking the computer and the police arrest her. Janet spends the weekend in jail.
On Monday, a prosecutor determines that the laptop belongs to a company of which Janet owns a third; that the dispute is of a civil nature rather than a criminal matter; and drops the charges. Janet hires a lawyer and sues Chrissy for malicious prosecution, false arrest, and false imprisonment.
Several years ago, I represented the Chrissy in this story. The case went all the way to a jury trial. Chrissy "won," but only after spending two years in litigation and tens of thousands of dollars defending herself.
That experience informs my skepticism of involving law enforcement in a business dispute. In the vast majority of situations, you would do well not to do so.
Before getting law enforcement involved in a business dispute, you should consider the following:
- Law enforcement generally stays out of civil matters. If the police get a sense that there is an existing business relationship between the accuser and the accused and the dispute does not involve violence, they are unlikely to get involved.
- Calling the police might get you sued. If charges are dropped or the accused is acquitted, he or she may have a claim against you. Even if you are successful in defending the civil claim, you will pay for it in time, money and aggravation.
- Just because you're the one who calls the police doesn't mean that you won't be the one leaving in handcuffs.
Police will conduct their own investigation. Don't be surprised if your business partner tells the authorities some nasty things about you, whether true or not. Depending on who the police believe, you may be the one who ends up arrested.
- You have no control over the criminal process. You will have little say in the scope of a criminal investigation and little idea about the status of the investigation for months or even longer.
- Information or property you need to run your business could be impounded as evidence. In criminal prosecutions, police often impound the items in an evidence locker for months or even years. Your need for an item to run your business will take a backseat to law enforcement's interest in preserving the chain of custody.
- Lastly, if you threaten criminal prosecution in an attempt to strengthen your negotiating position, you could be prosecuted for extortion. You really don't want that. So, don't do it.
There are many good reasons NOT to involve law enforcement in a business dispute. This is not to say you should never do so. If your business partner inflicts or threatens violence, dial 911. If your business partner is defrauding customers, lenders or the government, then notify the authorities. But, if you or your business are the primary victim of your business partner's conduct, you may be served best by talking to a lawyer about civil remedies before calling the police.
Life's too short for bad business relationships.
Move on and move up. ----------
For more information, see my blog at www.bfvalw.com
As always, please let me know if I can help.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
