Key Takeaways

  • Medical apparel incumbent Strategic Partners hit FIGS with an $800 million lawsuit claiming false advertising and stolen trade secrets.
  • Instead of agreeing to a confidential settlement, co-founders Heather Hasson and Trina Spear spent $40 million over several years to take the case to trial.
  • Incumbents often use predatory litigation as a business strategy to bleed startup cash reserves and divert executive attention away from customers.
  • While corporate defense lawyers advised the founders to stay emotionless, Hasson and Spear leaned into their visible anger during testimony, which convinced the jury that the claims were baseless.

The Incumbent Playbook Relies on Attrition

When a startup takes real market share from an established giant, the giant rarely responds by building a better product. They call their legal team. FIGS started selling medical apparel directly to consumers, bypassing the old retail stores that dominated the hospital uniform business. In response, incumbent conglomerate Strategic Partners filed an $800 million complaint against FIGS, alleging trade secret theft and false advertising.

The goal of an $800 million claim against a growing business is obvious: paralyze the leadership team, scare off prospective investors, and force a quick buyout or an expensive licensing deal. Spear recognized the trap immediately. “Their whole strategy is litigation, not innovation,” Spear said. “So that was their whole playbook, was suing companies and taking them out of business. And we thought, 'We're not going to take this lying down. We've got to go fight this.'”

Most boardrooms fold when confronted with nine-figure legal threats. Outside legal counsel almost always calculates the statistical risk, presents the staggering cost of discovery, and advises founders to write a check to make the plaintiff go away. Hasson and Spear took the opposite view. Settling would tag FIGS as a copycat that stole its way to the top. Fighting back required capital, but it protected the company's integrity.

Why Burning $40 Million Made Economic Sense

Taking a federal lawsuit through discovery and trial is financial torture for an early-stage company. FIGS spent $40 million defending itself. For many young companies, a $40 million legal bill is fatal. But Hasson looked at the balance sheet through a simple calculation of survival versus surrender.

“So we were being sued for, I believe it was $800 million, right?” Hasson explained. “So if we're going to spend 40 or 60, that's absolutely worth it, because we knew we were going to win. Because we just did. We knew we were going to win because what they were suing us for was just ridiculous.”

Spending tens of millions of dollars on legal fees is not an act of pride; it is an act of defense against corporate extortion. When an incumbent realizes a startup will pay to settle frivolous claims, the incumbent files another suit the following year. By forcing the case all the way to a jury verdict, FIGS established a reputation that shielded them from future bad-faith legal attacks. “This really showed the world like, you can't mess with us,” Spear said. “We're not going to settle. We're going to fight you, because we know who we are and that we didn't do anything wrong.”

Jurors Trust Controlled Anger More Than Polished Scripts

Litigation lawyers teach executives to act like lifeless deposition robots. They tell you to pause for five seconds, answer only with "yes" or "no," and show zero annoyance. Hasson and Spear ignored that advice.

When you build a brand from scratch by selling scrubs out of the trunk of your car, an accusation of industrial espionage is personal. During depositions and courtroom testimony, both founders allowed their actual frustration to show. “At many times, our lawyers were like, 'Don't be angry, you have to be this, you have to be that,'” Spear recalled. “And, in the end, we were just authentic and honest because we didn't know how to be anything else.”

Jurors are human beings with finely tuned dishonesty detectors. When an accused founder speaks through sterile corporate legal scripts, jurors assume the founder has something to hide. When a founder reacts with genuine outrage at false allegations, jurors see an honest builder being bullied by a predatory competitor. FIGS walked away with a complete defense verdict because the jury believed the people on the stand.

What to Do With This

Audit your cap table and board alignment before an incumbent attacks. Schedule a thirty-minute meeting with your lead investor this week to ask one direct question: if an incumbent competitor hits us with a bad-faith eight-figure lawsuit to halt our growth, will this board commit capital to fight to a jury verdict, or will you force a settlement? If your board prioritizes short-term risk avoidance over corporate survival, you need to know before the subpoena lands.