I recognize that when a business owner believes a monetary debt of $5,000 or less is owed to the business, there may be a temptation to control litigation costs by filing a lawsuit in the Small Claims Division of a Virginia General District Court.  Admittedly, there are some benefits, including:

• Expeditious justice between the litigants, so the cases are not protracted

• Formal rules of evidence do not apply, and neither side can be represented by an attorney

• A corporation or partnership has discretion to send the owner, general partner, officer or employee to handle the case

• Limited discovery afforded to either side, and judges tend to allow all relevant evidence to be considered with a goal towards determining the merits of the dispute

What’s the downside?  I will name a few:

• You are not guaranteed to stay in Small Claims Court even if you start off there. If the other side hires counsel, the case can no longer be adjudicated in the Small Claims Court and it will be removed to General District Court where there is greater formality and the rules of evidence apply.  Even if the other side does not hire counsel, a defendant still has the right to remove a case to General District Court prior to the court rendering a decision.

• You could be countersued. There are often two sides to every story.  Be aware that if the defendant files a counterclaim against the business, you as the plaintiff no longer have the ability to unilaterally discontinue the litigation.

• You could potentially enter a protracted and expensive appeal process. Even if you are awarded a judgment, the defendant has an automatic right to appeal the case to Circuit Court when the judgment exceeds $50.  If this happens, the litigation can go on for a year in a more formal forum with considerably broader discovery allowed.

Suing in Small Claims Court may be a valid choice in some cases. However, it is always wise that a business owner consult a litigation attorney before deciding to file a lawsuit in Small Claims Court.