Research Trends and Conclusions: Product Liability Defence 2013

With the benefit of over 16 years of research and tens of thousands of votes from clients and private practitioners, Who’s Who Legal takes a closer look at developing trends in worldwide product liability defence. The world’s top lawyers in this field have enjoyed a profitable year. The high number of lawyers recognised in our research demonstrates that this is a thriving practice area, and is expected to continue to flourish even in the face of financial constraints.

An overwhelmingly clear trend emerging from our research this year is the internationalisation of product liability defence. Whereas, as recently as five years ago, product liability litigation would be contained in a single country or jurisdiction, over the last few years lawyers have noticed an exponential growth in product matters reaching the courts in multiple jurisdictions. This is largely explained by both the wide distribution of products internationally, and the ease with which complaints about products can be communicated around the world. As one lawyer said: “Consumers talk.” And the internet and various forms of social media make it so much easier for them to do so, to the extent that a truly local product liability issue is now more the exception than the rule. US lawyers in particular highlighted this issue, noting that claims which would have been contained within the US less than a decade ago are now subject to follow-up litigation across the globe.

Of course, this has had an impact on lawyers’ practice. The fact that product liability claims are now likely to be brought in a wide variety of jurisdictions means that corporations are under more pressure to advance a coordinated response. Practitioners need to have a more global outlook from the start, as any weaknesses in a company’s international defence can easily be exploited by creative plaintiff lawyers. This has resulted in some international lawyers taking on more of a global strategic oversight role, liaising with domestic lawyers to coordinate a defence. Several of the lawyers interviewed also noted the rise in so-called “virtual law firms”, whereby corporate clients cherry-pick their favourite counsel in each jurisdiction to work on a coordinated defence.

In an effort to promote harmonisation among product standard enforcement authorities, the Organisation for Economic Co-operation and Development (OECD) launched the Global Recalls Portal in October 2012, an online update on the consumer products that have been recalled around the world. It also incorporates information about dangerous products previously held on the EU RAPEX system. The OECD Working Party on Consumer Safety recommended the system as a means of promoting safety for consumers worldwide, and the Portal allows for a more cohesive response from national authorities when dangerous products need to be recalled.

There are certainly mixed views on the increasing globalisation of product liability defence. For corporations, such a trend represents an enormously increased burden in defending themselves against potential claims; as one lawyer said, it is one thing to fight a claim in the US, but quite another to mount a coordinated defence in up to 70 countries, with different legal systems and various operational considerations to take into account. In terms of the legal marketplace, some practitioners suggested that the trend may begin to accentuate the distinction between large international firms and smaller domestic ones, the latter now more likely to find it difficult to attract big clients without a more high-profile “on-the-ground” presence in other jurisdictions where product liability claims may be brought. This concern has not seemed to affect the lawyers listed in this year’s edition, however, as we feature a good spread of practitioners around the world from a range of national firms as well as global players, particularly within the three most highly featured jurisdictions (US, England and Canada).

Increased Regulatory Obligations

It is perhaps unsurprising that, along with an international push for coordination among national product standard enforcement authorities, the regulatory standards which products must meet are increasing. The European Commission has recently published proposals for reform of the General Product Safety Directive, updating the existing rules to include more extensive requirements on labelling, marketing and reporting of potential risks to the relevant authorities, as well as increasing the power and duty of both domestic and EU authorities to deal with product risks and faults. This will be done by introducing a General Product Safety Regulation and Market Surveillance of Products Regulation. As well as increasing consumer protection, these changes are intended to reduce any unfair competition in the market, as companies at all stages of the product chain will be held to the same strict standards.

Increasing the regulatory burden on product manufacturers and handlers is something of a double-edged sword; meeting a higher standard will obviously cost the company more, but in doing so it is protecting itself from future liability, as consumers will find it more difficult to bring a product liability claim if the manufacturer has met all the necessary regulations. There is a definite split in opinion on this issue, with some lawyers suggesting that the implications for a manufacturer, and the potential impact on their entire brand, of releasing a defective product on to the market, mean that producers are very unlikely to sell a product which does not meet current regulatory requirements. However, several of the lawyers we interviewed suggested that, on balance, more onerous regulations may have a negative effect on companies and the products market in general. Although companies may be less likely to be sued, the cost of compliance with heightened regulations may result in their business no longer being commercially viable.

Again, this market trend is reflected in the changes lawyers are seeing in their range of work. Many practitioners, particularly in the UK, are now broadening their practice to encompass regulatory advice and counselling. This is due to companies needing an overall products service and seeking lawyers who can both advise them on how to comply with all the necessary regulations, and provide counsel if a liability issue does arise.

Effects of Financial Difficulty

Products manufacturers worldwide are still experiencing the effects of the global economic downturn. Even in the US, the undisputed global hub for product liability defence, lawyers explained that financial struggles have had an effect on their practice. A much-discussed trend in the US is the current tendency of juries to award large payouts for successful claims. There has been a spate of extremely high damages claims in the US recently, which has resulted in widespread fear of allowing a products case before a jury, even where the defendant has a fairly strong case. Therefore, US lawyers are seeing a steady increase in corporations settling claims before trial, and using alternative means of dispute resolution. As well as the unpredictability of potentially being excessively fined by a rogue jury, the complex nature of most claims means that it is becoming increasingly expensive to bring a products case to trial in the first place. In an era of declining budgetary resources, the US justice system is already strained and there is a lack of judicial funding, meaning both plaintiffs and defendant corporations may find it difficult to meet the expense of a trial.

Meanwhile in the UK, practitioners are still not sure what the Jackson costs reforms, to be implemented in April 2013, will mean for product liability. Although much of the difficulty will be on the plaintiff side, it is widely considered among defence lawyers that the changes, including parties being held to a strict costs budget and a pretrial assessment of merit, will change the way claims are fought. Lawyers across the world mentioned the tendency of clients to attempt to drive down prices, which puts additional pressure on the legal profession. Such reluctance to pay high prices is expected to be a continuing struggle for lawyers in this area, as “clients’ attitude to the purchase of legal services is unlikely to change in the foreseeable future”.

1

Legal Marketplace

Views on the legal marketplace were decidedly mixed among the lawyers we interviewed, with some suggesting that product liability defence work is growing steadily and others taking a more cautionary view that “things are picking up, but have by no means taken off” after the global economic downturn. However, the prevalence of product liability defence is demonstrated by the year-on-year rise in outstanding lawyers who we feature in this practice area, demonstrated by Chart 1 (above).

Generally, the most prevalent areas of specialisation among the top product liability defence lawyers are pharmaceuticals and medical devices; this is demonstrated by the high level of overlap between our product liability defence and life sciences books. Out of 411 lawyers featured in-guide for product liability defence, 93 are also highly nominated in our life sciences research, a total of over 22 per cent, and this area continues to provide defence attorneys with plenty of high-profile work including the ongoing PIP breast implants litigation. This year practitioners also noted the tobacco industry as a busy source of work, largely due to the plain packaging rules for cigarettes recently introduced in Australia and New Zealand. Proposals for the UK to follow suit with a similar plain packaging requirement suggest that this will be an industry to watch in terms of product liability counselling and defence work.

The recent discovery of horsemeat in pre-packaged and frozen food products has served to highlight the importance of consumer confidence in food and drink in the UK. Although most of the lawyers interviewed said that the scandal is expected to blow over fairly quickly and have no long-term effect on either consumer habits or marketing practices related to meat, they noted that it may contribute towards an increasing trend towards caution over food and drink labelling in general, and particularly unhealthy and high-sugar products. Already in the US, “large-size” fizzy drinks have been banned from sale due to their potential health risks, and lawyers suggest this is likely to set in motion a slew of safety, labelling and marketing requirements for sugary foods and beverages.

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Overall, the world’s top product liability lawyers have enjoyed a profitable year. The high number of lawyers recognised in our research demonstrates that this is a thriving practice area, and is expected to continue to flourish even in the face of financial and cost constraints.

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Nominees have been selected based upon comprehensive, independent survey work with both general counsel and private practice lawyers worldwide. Only specialists who have met independent international research criteria are listed.

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