Is It Worth Suing a U.S. Company for Unpaid Goods? Legal Costs vs. Benefits for Exporters

Doing business in the United States can open up exciting opportunities for an exporters around the world. However, it’s not always smooth sailing. When payments for goods go unpaid, many exporters face a tough decision: should they sue the U.S. company to recover their money? For businesses dealing with unpaid invoices, understanding the legal and financial implications of taking legal action is crucial. 

The Challenge of Unpaid Goods: A Common Exporter Concern 

When a U.S. company doesn’t pay for goods or services, the impact on an exporter’s business can be devastating. Whether it’s a small business or a larger enterprise, unpaid invoices create cash flow issues, disrupt operations, and threaten the financial health of a company. 

Many exporters hesitate to take legal action because they’re unsure if it’s worth the time, money, and resources involved. Concerns about navigating the U.S. legal system, high legal fees, and the possibility of not recovering their money are enough to make some businesses cut their losses and move on. However, before deciding to walk away, it’s important to understand the benefits that litigation can offer. 

Key Benefits of Suing a U.S. Company for Unpaid Goods 

1. Recovering Your Money: The most obvious benefit of filing a lawsuit is the potential to recover the money owed to you. If the U.S. company is solvent and the claim is well-documented, there’s a strong chance of recovering the full amount, including interest and even attorney fees in some cases. 
2. Setting a Precedent: Taking legal action sends a clear message that you’re serious about protecting your business interests. This can deter other companies from attempting to take advantage of you in the future and strengthen your reputation as a credible business partner. 
3. Legal Protections in the U.S.: The U.S. legal system offers robust protections for businesses, and many states have laws in place that favor creditors. For example, U.S. courts typically uphold well-drafted contracts, and some jurisdictions even provide mechanisms to recover attorney fees if you win your case. 
4. Potential for Settlement: Most business disputes, including cases involving unpaid goods, are resolved before they go to trial. Filing a lawsuit can push the other party to negotiate a settlement, allowing you to recover a significant portion of what you’re owed without a lengthy court process. 
5. Maintaining Industry Standards: When businesses hold others accountable for unethical practices like non-payment, it helps maintain trust and integrity within their industry. Pursuing legal action isn’t just about getting your money—it’s about preserving fairness in the marketplace. 

What to Consider Before Filing a Lawsuit 

While suing a U.S. company offers many potential benefits, it’s not a decision to take lightly. Below are several key factors exporters should consider before moving forward with legal action: 

1. The Strength of Your Case: Do you have clear documentation of the unpaid invoices, contracts, and delivery receipts? The stronger your evidence, the more likely you are to win your case. Poor documentation can make it difficult to prove your claim in court. 

2. The Costs of Legal Action: Legal fees in the U.S. can be expensive, especially for international cases. However, many attorneys work on a contingency fee basis, meaning you only pay if you win. It’s important to discuss fee structures and costs upfront with your legal team. 

3. The Defendant’s Solvency: Is the U.S. company still in business? If they’ve declared bankruptcy or have no assets to seize, even winning the case might not result in recovering your money. A solvency check is a critical step before pursuing litigation. 

4. Jurisdiction and Venue: Where will the lawsuit be filed? Contracts often include clauses specifying jurisdiction. If not, you may have to file the case in the state where the U.S. company is based. Understanding the jurisdiction’s laws and court system is essential. 

5. Time and Resources: Litigation can be a time-consuming process, especially if the case goes to trial. Exporters should weigh whether they have the time and resources to commit to a lawsuit or if they’d prefer to explore alternative solutions. 

What Are the Alternatives to Filing a Lawsuit? 

If you’re hesitant about suing a U.S. company, there are alternative approaches to recovering unpaid goods: 

• Negotiation: Sometimes, initiating direct communication with the debtor can lead to a resolution. A payment plan or partial payment agreement may be negotiated. 

• Mediation or Arbitration: These alternative dispute resolution methods can be faster and less expensive than traditional litigation. 

• Collection Agencies: Hiring a collections agency to recover the debt may be an option, but keep in mind they often take a percentage of the recovered amount as a fee. 

The Role of Attorneys in Unpaid Goods Litigation 

For exporters unfamiliar with the U.S. legal system, partnering with an experienced attorney is essential. A skilled attorney can: 

• Evaluate the strength of your case. 

• Navigate jurisdictional complexities. 

• Represent you in negotiations, mediation, or court proceedings. 

• Pursue cost-effective strategies to recover your money. 

At Ayala Law, we specialize in business litigation, including cases involving unpaid goods. Our team has extensive experience helping international exporters recover what they’re owed from U.S. companies. We’ll work with you to develop a personalized legal strategy that aligns with your goals and budget. 

Is Suing Worth It? A Cost-Benefit Analysis 

Ultimately, deciding whether to sue a U.S. company for unpaid goods requires a careful cost-benefit analysis. Consider the potential recovery amount, the legal costs involved, and the likelihood of success. While litigation isn’t always the right choice, it can be a powerful tool for holding businesses accountable and recovering what’s rightfully yours. 

Conclusion 

Unpaid invoices shouldn’t be the end of your business relationship with the U.S. market. Don’t let fear of the legal process stop you from exploring your options, whether through negotiation, arbitration, or litigation, there are paths available to recover your funds. 

If a U.S. company owes you money for goods you’ve provided, contact one of our experienced business attorneys at 305-570-2208. You can also email our founding partner, Eduardo Maura, directly at eduardo@ayalalawpa.com.     

We at Ayala Law PA are dedicated to helping those in legal need. Please don’t hesitate to schedule a case evaluation with us online here.    

[The opinions in this blog are not intended to be legal advice. You should consult with an attorney about the particulars of your case].