Answer, dismiss, or arbitrate
Three doors out of the complaint. This is the last cheap decision on the map.
Where you are
The response window is running. What you file now decides whether you reach discovery — which is the entire ballgame for your budget.
You can still end this here.
How settlement works →Cost so far
You are now at roughly 5× the cost of answering that first letter.
What this is
One decision, made once, in one window. Get it right and the case can end here for a small fraction of what the next phase costs. Get it wrong and you're in discovery, where the money is.
Door 1 — The Answer
You respond to the complaint paragraph by paragraph: admit, deny, or state that you lack enough information to do either. You raise your affirmative defenses — reasons you win even if their allegations are true, like the statute of limitations having run or a release they already signed. You raise any counterclaim.
Affirmative defenses generally have to be raised here or they're gone. This is the technical precision that makes DIY answers dangerous.
Filing an answer means the case proceeds. You are going to discovery.
Door 2 — The Motion to dismiss
The argument is narrow and powerful: assume every word of the complaint is true — it still isn't a claim the law recognizes. You are not arguing about facts. You are arguing that their story, at its best, doesn't get them anything.
Winning ends the case, or trims it. Often the plaintiff gets leave to amend — a chance to rewrite and refile. A dismissal with prejudice is over; without prejudice means they can come back.
This is the highest-leverage filing on the entire map. It is small, it comes early, and it can end the whole thing before you spend anything real.
Door 3 — The Motion to compel arbitration
Only available if a contract with this person says disputes go to arbitration. If it does, you can ask the court to send the case there instead.
Arbitration is usually faster and more private, and it usually has narrower discovery — which, given the shape of this map, is the thing worth caring about. It is not automatically cheaper: you pay the arbitrator, and appeal rights are extremely limited. Whether it's better depends on the case and on the clause.
The larger lesson, for the version of you that isn't in a lawsuit right now: this door only exists because someone put a clause in a contract before there was any dispute. That is what good papering buys — an off-ramp that exists before you need it.
What it costs you
All three doors are small boxes. Real money, but a rounding error against what's behind them.
Typical time: briefing and a ruling commonly take a few months. Some courts pause discovery while a dispositive motion is pending; many don't — which means you can be paying for discovery and for the motion at the same time.
What you decide here
Is there a version of this where the case ends before discovery? If yes, that path is almost always worth funding, because the alternative is the largest box on the map.
Also: is discovery going to hurt more than the claim? Some cases are worth resolving not because the claim is strong but because the other side gets to read everything you've ever written. That is a legitimate reason to settle a case you would win, and it is not cowardice — it's arithmetic.
What you actually do this week
Get a straight answer on the motion to dismiss. Not "could we file one" — anyone can file one. Ask: what are the odds, what does it cost, and does it stay discovery.
Hand over every contract with this person. The arbitration clause you forgot about is worth more than any argument you can make.
Ask what discovery will look like if the case survives. Custodians, date range, systems. You want that number before you choose a door, not after.
Ask about fee-shifting. Some claims and some contracts let the winner recover fees. It changes settlement math in both directions.
Decide what you'll spend before you're emotionally invested. Set the number now, while it's still abstract.
The mistake at this stage
Filing a motion to dismiss because it feels like fighting back.
A weak motion costs money, loses, teaches the other side your defense, and delays the case — which helps whoever has more time, and that is rarely the startup. "We should fight this" is a feeling. "This motion has a real chance and here's why" is an analysis. Only fund the second one.
The opposite mistake is quieter and more common: skipping a good motion to dismiss to save money, and buying discovery instead. That's saving a little at the top of the map to spend a great deal further down.
You can still end this here
A pending motion to dismiss is leverage. The other side is looking at real odds their case evaporates, and that shows up in what they'll accept.
This is often the best-value settlement window on the entire map: enough has happened that both sides can price the case honestly, and not enough has happened to have spent the money. → How settlement works
Where Story fits
Whether door two is real is a judgment call, and it is the kind you want made with you rather than for you.
A litigator can tell you whether a motion to dismiss is winnable. A general counsel asks the next question: given those odds, the cost of both branches, and what discovery would do to this specific company, which door is right for the business. Those are different questions, and founders usually only get the first one answered.
The arbitration clause that ends this case at door three was written years before the dispute, by someone who knew to put it there. That part Story owns outright — the contracts and consents that decide which doors exist when something goes wrong.
This is general educational information from the attorneys who build Story. It is not legal advice, it does not create an attorney-client relationship, and it is simplified — litigation procedure varies significantly by jurisdiction and by case. Talk to a licensed attorney about your actual situation.
We're lawyers, remember? Please read this important note:
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