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Best Practices for Small Businesses

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With only a few limited exceptions, New Jersey Courts require that a business entity be represented by an attorney before pursuing any action. Many small business owners do not build litigation costs into their budgets, choosing instead to forego a lawsuit altogether and absorb the loss as a cost of doing business. Even if the small business owner does approach an attorney, they will spend otherwise appropriated funds on an attorney’s hourly rate, or have difficulty retaining one on contingency, especially when the suit should be brought in the Special Civil Division (a suit for monetary damages for less than $15,000.00).

In order to avoid this difficulty, small business owners should incorporate “attorney’s fees provisions” in all of their contracts. Effectively, an “attorney’s fee provision” may circumvent the “American Rule,” that each party is to pay its own costs and attorney’s fees. By adding this provision, if the small business owner’s claim is successful, the Courts may award attorney’s fees to the owner, which both entices attorneys to take the case regardless of the amount in controversy, and further protects the owner from having to go out of pocket to recoup what is rightfully theirs.



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