For the small business owner, the liberal availability of pre-trial discovery is one of many risk factors inherent in litigation.
Generally, through any of the tools of pre-trial discovery, a party can be forced to disclose anything that may be relevant to the case. Failure to comply with such requests can result in a loss of the case, through the entering of a default judgment by the court, the imposition of a monetary sanction by the court or something far worse--a jail term.
For example, should a party fail to show up for a deposition, the court might, at the request of the other party, order the deposed party to appear. Failure to comply, at that point, might result in a criminal contempt citation and a jail term of six months.
Further, because of the liberal nature of discovery, a plaintiff can use requests for documents to overwhelm a defendant. The cost and time involved in complying with such requests can be tremendous. This is not always a mere side effect. It is sometimes the very intent of a strategic decision by the plaintiff's counsel.
The intent of pre-trial discovery is to force the parties to reveal weaknesses in their cases and, thus, to encourage the parties to settle the case, or at the very least narrow the issues for trial. While there are a few defenses that will allow a party to refuse to answer questions or turn over documents, discovery is broadly construed, and thus the defenses are relatively rare. The end result of pre-trial discovery may be that a defendant will be forced to answer questions or turn over incriminating documents that will provide the very evidence necessary for the plaintiff to win the case.
This underscores the importance of having a plan for pre-trial discovery.