My latest research project involves the topic of legal bullying, which I define in the corporate context as one firm exploiting their resource position to threaten a smaller party with a weak or non-existent legal claim, benefitting from the high transaction costs characterized by our very expensive, lengthy and uncertain litigation system.
I pull several examples from the intellectual property realm (trademark bullies, patent/copyright trolls and efficient infringers), employment (wage theft, and worker misclassification involving independent contractor status and oppressive non-competes in low wage industries), and business regulation (using the regulatory system to impose uncertainty on another’s business). From a strategic standpoint, these tactics often work. From an ethical and fairness perspective, not at all.
I recently presented this research at a symposium on proactive law at the Ross School of Business at the U. Of Michigan sponsored by the Business Law area at that school. The greatest interest was devoted to the second half of the article related to various examples that show how smaller parties have used social media and legal crowdsourcing to fight back against legal bullying. One discussant equated it to guerrilla marketing. Another saw parallels between this work and research related to private politics, or how private parties engage in advocacy to enact social and legal changes in business. What I have found is that the use of social media to fight legal bullying is getting more sophisticated as parties build coalitions with activists and tie-in the mainstream media to shame legal bullies.
In the end, my recommendation to large companies is to stop and wait before engaging in a knee jerk reaction to file claim against a much smaller opponent. The best course of action is to consult the matter with in-house attorneys to determine if the threat is real (external counsel may have different motivations and incentives), and to review the matter with internal corporate social responsibility officers and marketing personnel to gauge any negative fallout that might arise. In today’s transparent and interconnected world, an internal risk assessment should always be made before pursuing a weak claim against a smaller opponent.