To sue or not to sue? That is the question.

Most businesses will be faced with a dispute at some stage in their lifespan. Some disputes will resolve themselves naturally, others will escalate and professional legal assistance will be needed.

While most businesses faced with a dispute can sue, the real question is whether they ought to. This requires consideration of a number of questions.

The first question is obvious: do I have a case? Sometimes the answer will be straightforward — for instance if your contractual counterparty has flagrantly breached the terms of a written contract. Other times, answering this question will require rigorous analysis and legal creativity; for instance if someone has indirectly harmed your business interests or caused you reputational damage.

Each case is fact-specific. A reputable lawyer will be able to advise on the legal merits of your particular case.

Next, you should think about what you will gain from suing. Businesses typically commence proceedings to collect cash compensation (usually known as money damages) for losses suffered, or to enforce the terms of a contract.

If the amount claimed is insignificant, and will likely be outstripped by legal costs, then you should strongly consider resolving the dispute informally. On the other hand, a potential damages claim might be very substantial, and it may be in the company’s best interests to pursue all available legal remedies. You might even owe a duty to your shareholders to do so.

If you intend on seeking cash compensation, you should conduct due diligence on your opponent at an early stage. If your opponent has few to no assets, then your victory will be a hollow one as you may be unable to recover the money awarded. Your lawyer will be able to assist in identifying assets against which a successful judgement can be enforced.

On the other hand, you might gain more than just the damages you collect. Perhaps it is important for your business to make a point by pursuing its legal rights. A luxury brand might take a small-scale counterfeit retailer to court in order to demonstrate its zero-tolerance policy.

A construction company might sue a subcontractor to demonstrate that it will not tolerate being cut out of the loop. It might be critical to your company’s ongoing financial well-being to sue a former director who has stolen the company’s client-list or misused its trade secrets.

Equally, there may be reputational risk incurred by taking action. Will someone want to work for an employer that sues former employees? Will suppliers want to risk dealing with a litigious counterparty?

Suing is rarely your only option. Your lawyer will generally recommend first pursuing other alternatives where appropriate, for example, by serving letters of demand or contractual dispute notices, and engaging in direct negotiation and mediation.

It might be that you can resolve the dispute promptly and with minimal expense. This may also pave the way forward for a continued, prosperous business relationship.

There are also paths to recovering simple debts that do not involve litigation, for example, by serving a statutory demand in the DIFC. Under that procedure, if a debtor company fails to pay a debt exceeding $2,000 within three weeks, it will be deemed insolvent.

Most claims settle before they reach trial. Settlement is usually less expensive, less stressful and less risky than going to trial. Often, however, it is necessary to formally commence proceedings in order to bring parties to the negotiating table.

This is especially true in high-value and complex cases, where meaningful negotiations typically take place well into the substantive proceedings.

In short, good preparation and, if the matter is complex, a significant investment of time and effort by you and your lawyers. Litigation expenses vary greatly, depending upon the case complexity, the evidence involved, and the potential for early resolution. Your lawyer will be able to provide an estimate of the likely costs involved for each stage, but it is generally expensive.

Whatever your circumstances, the decision to commence proceedings should be made with careful consideration of the merits, business objectives and likely business outcomes. Each situation is unique and calls for its own evaluation.

Next time you are faced with a business dispute, be sure to ask the right questions upfront.

— The writer is Partner, Gibson Dunn & Crutcher LLP.