When legal disputes between owners of closely held companies turn the corner past “Let’s resolve this issue without litigation” and head toward “See you in court,” the owners and their lawyers typically begin jockeying for the upper hand in a potential lawsuit. The most effective way to grab the upper hand is to be the party that files the lawsuit. That party gets to shape the lawsuit to their liking—both in terms of which court they decide to file the lawsuit in and the legal claims and supporting facts they include in the lawsuit.

Last month, we tackled Pennsylvania’s “universal” demand requirement. As a refresher, unlike many states, Pennsylvania will not excuse the shareholder of a company who wants the company to sue its executives or directors from making a written demand on the company’s board of directors prior to filing a lawsuit even when doing so would be futile. “Futility” means that the composition of the company’s board makes it incapable of impartially deciding whether to bring suit on behalf of the company based on the wrongful conduct alleged by that shareholder in their demand. Normally, if such a demand would be futile, a would-be shareholder-plaintiff can skip the written demand and move straight to filing their lawsuit.