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First Law Suit for a Business – Small Claims Court Basics

I get lots of calls from fledgling business owners facing the prospect of their first civil litigation, which often takes place in the District Court Division – Small Claims, or Small Claims Court. Does one need a business lawyer for these types of smaller contract disputes? Small Claims Court actions are a less formal proceeding – imagine a sane version of Judge Judy or the People’s Court without catchy entrance music – between parties for certain types of claims (usually money for a breach of contract or for possession of property) for less than $5,000.00 One can only initiate a small claims case against a defendant in the county in which they reside.

It often does not make sense financially to obtain a business lawyer for a short hearing when the amount in question is under $5,000.00. North Carolina law requires that corporations be represented by an attorney when they appear in court but that is generally not applicable to small claims court.

I generally respond to small claims inquiries from business owners with two potential solutions: 1) if you are in a business where there are frequent disputes over relatively small amounts of money (such as vendors who deal with sales in volume), law firms like Maginnis Law are available on retainer to handle any legal matters you may have for an on-going basis. A small monthly payment for a lawyer gives you certainty of the amount spent for legal fees as well as the confirmation that you’ll have skilled representation to handle any collection cases that arise.

The other solution is to let the individual take their chances in small claims court. Does this sound like a terrible idea? Well, not necessarily. So long as an appeal is announced in open court at the hearing or filed within 10 days of the judgment, the parties will have a de novo trial in District Court. De novo simply means that the process starts completely over; it’s as if the small claims proceeding never happened. Your attorney can then file a Motion for Repleading and Further Pleading. Once granted, this motion will force the other side to litigate this case just as if it had been filed in District Court in the first place. The thought of having to obtain and pay for their own lawyer is often enough to convince the other side to settle the matter without you having spent an enormous amount on legal fees.

Is your business facing the prospect of small-claims civil litigation? Or facing the prospect of being the plaintiff in MANY small claims actions? Contact Maginnis Law, PLLC for a consultation on company’s best options in getting a cost-effective solution for your business’s smaller litigation issues. As your business grows, you’ll be much more prepared for the inevitable larger legal issues that unfortunately are likely to arise when your business is successful.

Maginnis Law, PLLC is a full-service business litigation law firm based in Raleigh, NC. Maginnis Law handles matters throughout the Wake County area, including Wake Forest, Rolesville, Youngsville, and Franklinton. Contact the firm at 919.526.0450 for an initial consultation or visit our website at