3 Easy Steps to Manage the Risk of Products Liability

Every manufacturer must plan for a product liability lawsuit. A product liability case can result in tangible losses, such as lost sales, lost market share, and legal costs; and intangible losses, such as lost reputation, and lost productivity from employees dealing with the lawsuit rather than daily operations.

Here are three easy ways that you can plan ahead to manage the risk of a product liability lawsuit:

Step 1: Designate the person who will be the "face of the company" in a crisis.

One person should be designated as the face of the company for all purposes in handling a products claim, even before a lawsuit is filed. This person is the only corporate spokesperson who deals with the media and the claimant. Other employees' involvement can undermine a crisis management situation.

If it is a clear liability situation, the designated representative should quickly express regret and take responsibility on behalf of the corporation. He or she should also express the company's recommitment to safety and how the company intends to do so. Keep in mind that juries tend to award punitive damages when they perceive a corporation as unsympathetic to a person's injury, or "sweeping things under the rug" rather than responding proactively. When the litigation comes, a properly handled message will cause the event to be viewed as an unfortunate but understandable mistake rather than a forum for public outrage.

Step 2: Send a consistent and accurate message.

Frequent and accurate communications with the claimant, media, customers, and governmental agencies are essential. Reporting should be candid and presented in a positive way, focusing on the proactive measures being taken. This lays a good foundation for the defense of the inevitable lawsuit. It shows that the company is "on the case." Never speculate about what could have happened, but rather fully disclose all facts that are known at the time. Provide regular and thorough updates as information becomes available. Stay focused on the message and talking points previously developed. Avoid attempts by others to draw the company into a version of events it did not develop.

Manufacturers usually know what kinds of liability cases they may likely face at some point, even before they occur. You can develop messaging in response to those events before they happen.

Step 3: Get early legal analysis of likely types of products cases.

The legal course of a products liability case is fairly predictable. A manufacturer can plan for it in advance. Executive level management should have a clear understanding of legal issues, such as development of effective product warnings and when the company must initiate a product recall. This will help them make appropriate choices for preventing a crisis and responding when a crisis occurs. The lawyers at Kring & Chung, LLP can brief you on the relevant products liability law effecting your company.

Laura C. Hess is a Partner with Kring & Chung, LLP's Irvine, CA office. She can be contacted at (949) 261-7700 or lhess@kringandchung.com.

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