Research: Trends & Conclusions

With the benefit of over 17 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.

While product liability law requires a depth of expertise and a sophistication of strategy often found in boutique firms, it is also increasingly requiring an international dimension to its practice. As clients, regulators, justice systems and plaintiffs bars strive to maximise their efficiency, the legal market is continuing to evolve.

We received mixed reports regarding the levels of work being seen by the market’s leading players, but with a few exceptions it can generally be described as having plateaued. The resilience and longevity of domestic electricals has improved hugely, reducing the number of cases they generate. Aviation disasters are now few and far between relative to previous decades, although they do prompt large amounts of work when they occur. The automotive sector throws up the occasional large case, but asbestos work has been commoditised and is generally dealt with through schemes. Tobacco litigation has reached a point of stasis, the issues now well defined and unchanging. Recalls – increasingly likely to be voluntary – continue to drive work, alongside the traditional mix of litigation, avoidance, risk management, insurance, labelling and compliance, with some leading firms called to advise on research and product development as well. Food-related claims were repeatedly cited as an avenue of potential work, with dietary supplements, labelling and health claims coming under scrutiny. However, overall the main sources of work remain the same: pharmaceuticals and especially medical devices. 

In order to do this kind of work on the scale that law firm economics demand, major firms are focusing exclusively on products that have mass – or at least very broad – use. The focus is on issues where potentially thousands of people are exposed, rather than single users who have been injured, and in practice this means the focus falls on the pharmaceutical industry. The diversity of the products pharma companies produce and the range of their side effects, multiplied by the new science that reaches the market on a regular basis, generates a volume of work that requires larger international firms. However, even in this industry the amount of work has levelled off, and this is said to be part of a wider trend rather than an isolated pause. “It is difficult and expensive to bring and win these cases,” said one expert, citing recent court decisions in the US reducing their scope, changes to the regulations governing the recovery of success fees from defendants, and an increasing comfort on the defence side with multi-district litigations also slowing down the progress of actions that are brought. “Things get aggregated and consolidated and almost all end up in settlements” said one US lawyer. “You see very few ‘bet the company’ litigations now.” We received multiple reports of cases settling even when defendable, to avoid expense and any potential unintended consequences.

Set against this, there has been a big uptick in medical devices work. “Orthopaedic implants always give rise to claims,” said one lawyer. “Hips will fail, and some will do so prematurely.” There is also much work deriving from PIP breast implants, and the case is viewed as something of a landscape changer as it has prompted governments and the EU to get involved with new regulations and issues such as traceability and unique identifiers now drawn into the mix.

In jurisdictions where the law allows, the plaintiffs bar remains the yin to our featured lawyers’ yang and drives a lot of the work in this sector. Long established in the US, there is room to grow in other countries although issues remain to be negotiated with some reports of “doom and gloom” passed on to our researchers. However, the expansion and success of firms like Slater & Gordon is a significant development, as is the increase in consumer rights protection in many EU countries. The plaintiffs bar in the US continues to think laterally in search of the next lucrative area – as one partner puts it: “If the Supreme Court closes down an avenue, those guys aren’t just going to retire.” And individual consumers are also ever more aware of their rights and potential areas of redress.

This growing sophistication is shared with clients in this area. Their awareness of risk management is widely reported to have increased, with larger companies now more proactive and ready to get corrective action set in place. Compliance work has moved up the agenda as regulators have become more active around the world, prompting the need for demonstrable processes to be in place throughout the product’s chain. Lawyers are called upon to help clients engage with the regulators – or in some cases to help them avoid doing so – and to demonstrate the lengths clients are going to in order to address problems that have arisen and mitigate potential punishment. This work quickly diversifies into broader corporate social responsibility issues, as well as environmental, labelling, marketing and other considerations. Bribery work is not yet generally part of the remit but, as with so many sectors, it is on the horizon. “Reputation is also very important for big clients and as keeping them out of trouble is not something that is dictated by the economic cycle I am busy all the time,” says one leading practitioner. Clients want advice on the whole package of how product issues will affect them, which encompasses both regulatory and litigation counsel applied throughout their process, from manufacturing all the way to advertising.

Lawyers reported an overall shift of work in-house, including regulatory compliance, but risk assessment still often requires the input of outside counsel, as does the contentious work that arises from this area. “Clients are way more sophisticated across the board,” said one leading lawyer, to the extent that in-house counsel often consider themselves as part of their outside counsel team. “They don’t just phone when they need you, they’re on the phone all the time”.

Many of the lawyers selected in this publication are effectively acting in a senior in-house counsel role and giving strategic advice, while in turn they cite the rise of inside counsel who fully understand working with product liability defence specialists. “It’s so much easier to work with an inside counsel who is experienced with products cases. They are aligned and know what to expect,” said one UK expert. “Ten years ago they would have been unaware of how this sector works and that makes everything harder”.

This sophistication also manifests itself in other areas, such as a requirement for firms to do more work for less money and a greater appetite for alternative billing. For firms with major clients and a huge volume of work there is room for flexibility over flat fees, and the use of third-party providers for disclosure and other related aspects has caught on in recent years. “Technology has reduced the firms’ ability to have huge teams and to bill for them massively” said one client. And set alongside a greater amount of work being done in house there is significant pressure on firms in this sector to continue to bill at levels that are sustainable for both clients and themselves. This pressure is exacerbated by reports of a general shift towards regulatory work and away from litigation. While the decision on whether or not to contest a case is largely based on the attitude of the individual client, there has been a general trend towards more experienced litigators managing the cases in-house, and having greater expertise on the client side puts even more performance pressure on the outside firm. “There is a greater premium on efficiency, rates and staffing because the people you’re working for understand how to structure cases,” are the words of one private practitioner.

Competition for counselling work is high. As one source says: “There is a lot of rate pressure in this area and a lot of experienced lawyers.” While for the largest and most complicated issues clients require the best and price is not the only consideration, in some sectors clients were reported to feel that they can rely on smaller firms at lower rates until they are definitely going to trial, when they will appoint with the top-tier specialists. In commoditised high-volume insurance claims, clients have been reported to switch firms based purely on price.

However, in other sectors clients are calling on their lawyers to help with early assessments of new products and to help tailor an effective compliance process. Experts in product liability practices at larger firms reported that their clients are rarely drawn from the firm’s institutional clients. They say they are approached specifically for their expertise in product-related issues, which can bleed into intellectual property and brand value considerations. Several firms reported that they are now earning a broader array of business from their clients, not just trial work. There were reports of a greater demand for industry-specific practice groups, with an expectation that these will become more prevalent in future. As ever, firms are charged with offering value to their clients, and what is valuable to them has changed. “It’s no longer about winning cases for them,” said one. “Now it is risk management and cost effectiveness.” These areas have traditionally been handled in-house, so this sector is seeing firms forced to re-position themselves in strategic partnership with their institutional clients.

In terms of the legal market, there has been a certain amount of contraction, with the UK and US markets seeing some recent departures. Product liability tends not to be an area that firms set up permanent teams in, and as the practice area becomes ever more complicated, the number of those who dabble is dwindling. Set against this is a regularly cited necessity for firms to have an international capability to service client demand effectively. Litigation now tends to spread across the world and this requires coordination. “Without a footprint you can’t really do this work,” said one lawyer. This can be achieved either by local offices or by informal relationships with local counsel, and with work predicted from the emerging markets of Africa, Asia and Russia these capabilities will become ever more necessary. However, while this work increasingly takes on a cross-border dimension it is not a sector that many of the largest international firms have as a focus, and this has ramifications for the firms looking to carve out their niche. As the pendulum swings towards compliance, those firms with a pre-existing strength in regulatory work are well placed to capitalise.

Looking to the future, the US leads the way, but while America tends towards litigation, in Europe the focus is regulation, and there is expected to be more enforcement work going forward. The EU is expected to drive this with national regulators following suit, and the trend towards consumer product class actions is also predicted to continue. In terms of fertile industries for this type of work, nanotechnology was cited as an area to watch once again, as was climate change and toxic exposures. The main area of focus, however, is the food and drink industry, which is expected to generate high volumes of legal work in the near future. Regulators, politicians and plaintiffs have all been focusing on the industry, and lawyers foresee the “classic pattern” that previously afflicted their tobacco clients: litigation over the absence or insufficiency of label warnings, and the veracity or otherwise of health claims. Whether this is driven by victims or by the plaintiffs bar is a discussion point, but momentum is gathering and firms with longstanding experience in this field are actively promoting their expertise to food clients.  The landscape has shifted for the giants of the food and beverage industry; whereas 10 years ago a product case for a fast-food chain would be isolated and relatively straightforward, now the risk comes from obesity and its attendant problems.

This all points to a busy future in this sector counterbalancing the competitive nature of the market that was cited by so many of the lawyers we spoke to. “It is much harder to get the engagements from clients now because there are so many good lawyers out there,” said one. Nonetheless, product liability work retains its allure. It is viewed as interesting, challenging and rewarding legal work, and working so closely with clients directly on the products they sell quickly forges strong connections with the heart of the company and its people. This often translates into long-term mandates, and also offers the potential for involvement in other lucrative areas such as IP law. In summary, and according to one source we spoke to, product liability is “work that is both interesting and valuable to the client, and that’s what lawyers want to do”.

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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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