When to File a Protective Order in Business Litigation
Research shows that 40 million lawsuits are filed in the US every year. Not all of these involve businesses, but other statistics tell us that anywhere between 36-53% of small businesses get sued every year. You can’t always avoid disputes as a business owner, but you can be prepared.
As an experienced business law attorney, I've seen firsthand how vital it is to file a protective order when entering into litigation. A protective order isn't just a formal piece of paper; it's a shield that protects your proprietary or confidential information from being exposed to the public while you're dealing with a lawsuit.
So, when should you file a protective order in business litigation? Let's unpack the answer together.
When to Consider Filing a Protective Order in Business Litigation
When entering into litigation, it's essential to consider the potential risks of exposing sensitive information related to your business. This information could include trade secrets, financial data, and proprietary processes or strategies that give you a competitive advantage in the marketplace.
If this type of confidential information were to become public during a lawsuit, it could seriously harm your company's reputation and bottom line. That's why it's crucial to file a protective order as soon as possible when entering into business litigation.
Oftentimes, parties reach an agreement on the terms of an order and submit a stipulated protective order for court approval. It is uncommon for you or your opponent to draft a new protective order every time you need one. Instead, attorneys often rely on a previously used template. This approach is efficient, but there is a risk of overlooking important provisions or failing to comply with the court's local rules.
What to Consider When Filing
Whether you decide to rely on a pre-existing protective order or file a new one, it's important that it adequately addresses the following concerns:
Identifying the material that requires protection - Rather than pinpointing individual documents, your protective order should categorize the confidential or proprietary information that, if leaked, could negatively impact your competitive position or disrupt your business operations. It's essential to be as detailed as possible when defining these categories of sensitive material and the potential harm that could transpire from disclosure.
Determining who can review the protected material - Typically, parties involved in the case, their attorneys, employees assisting in the litigation, experts, witnesses, court reporters, and court personnel are granted access to confidential information. It's also key to include provisions for a second tier of confidentiality, aptly known as "attorneys' eyes only," for highly sensitive information. This ensures that only those who absolutely need to see the information will have access to it.
Challenging a designation of confidentiality - The order should lay out a clear process for challenging the designation of documents as confidential. If no challenge is made within a certain number of days, the documents should be deemed confidential. The designating party must then respond to any objections raised within a specific timeframe. It's worth noting that interested members of the public should have the opportunity to challenge the confidential nature of any document. This ensures transparency and fairness in the proceedings.
The inadvertent production of confidential documents - The order should state that unintentional disclosure of confidential documents, not marked as such, will not be considered a waiver of confidentiality. It should also establish a timeframe within which the producing party can give notice of the mistaken disclosure. The receiving parties should then return or certify the destruction of the document within a specified timeframe. This protects against accidental breaches of confidentiality.
Filing documents under seal - While the order designates certain documents as confidential, it doesn't automatically mean they will remain confidential if filed with the court. Some courts allow protected documents to be filed under seal without a separate motion, while others require a motion showing good cause to seal a document. It's important to review the court's local rules and the judge's guidelines regarding filing under seal.
How to handle confidential material after the case is resolved - It's common for the order to require the return or destruction of confidential material. However, in cases where confidential material is mixed with non-confidential material, it can be a complex and costly process to comply with the order. Consider including an option to keep confidential material indefinitely, subject to the terms of the order. The order should also specify the court's continuing jurisdiction and penalties for non-compliance.
Types of Protective Orders
There are several types of protective orders that can be filed in business litigation, depending on the specific circumstances of your case. Some common types include:
Confidentiality Orders: These orders prohibit the parties involved in the litigation from disclosing any confidential information to anyone outside of the lawsuit.
Non-Disclosure Orders: Similar to confidentiality orders, non-disclosure orders also prevent any parties from sharing confidential information with outside sources. However, they may include specific exemptions or limitations on who can access the information.
Protective Order Against Third Parties: This type of order is used when there is a third party involved in the litigation who may have access to sensitive information. It restricts their ability to share or use this information for any purpose.
Benefits of Filing a Protective Order
Filing a protective order can provide several benefits in business litigation, including:
Protecting Your Competitive Advantage: By limiting the dissemination of confidential information, a protective order can help you maintain your competitive edge in the marketplace. This is especially important in industries where innovation and unique processes are key to success.
Maintaining Privacy: Business litigation can be a highly publicized and contentious process, but filing a protective order can help keep the details of your case private. This can protect your company's reputation and prevent any negative publicity.
Saving Time and Money: Without a protective order, parties may waste time and resources arguing over what information can be shared or used in the litigation process. A protective order streamlines this process and ensures that only necessary information is disclosed.
Let My Experience Be Your Guide
Filing a protective order in business litigation is crucial to protecting sensitive information that your business relies on. As an experienced business law attorney, I have ample experience in drafting and negotiating protective orders that effectively protect my clients' interests. Let me guide you through this process and help safeguard your company's confidential information during litigation.
By carefully considering the factors outlined above and drafting a comprehensive protective order, you can safeguard your proprietary and confidential information during litigation. Remember, the goal isn't just to win the case, but to protect your business and its future.
Contact me at Martinez Law Firm, Inc. in Irvine, California, to schedule a consultation. I work with businesses throughout Santa Ana and Southern California. Whether you're located in Orange County, Los Angeles County, or San Diego County, my door is open to you.