Product Liability Defence 2017: Trends & Conclusions

Who’s Who Legal’s research for the 2017 edition of Who’s Who Legal: Product Liability Defence came at an interesting time for lawyers practising in the area. As developments in the attitudes of government authorities amid considerable political change in the US looks set to tip the balance in favour of corporations, particularly in relation to federal pre-emption more generally, new technologies and Big Data pose important questions for regulatory authorities and manufacturers alike. The legal market also finds itself at a formative moment, with a desire for comprehensive coverage and dynamic representation forcing law firms to adapt their services to meet and service client needs.

Regulatory Developments and Compliance

As reported last year, regulatory compliance and product recalls seem to be occupying an increasing amount of practitioners’ time in the product liability space. As government authorities become increasingly rigorous in their approach to the enforcement of regulations, product liability lawyers are finding themselves engaged earlier on in the process in advising clients on the best strategy to mitigate the risk of litigation. As one practitioner put it, “It is important to get ahead to offer clients the best possible defence later on.” Interaction with government agencies, for example, as well as an in-depth knowledge of the protracted process, allows lawyers to foster good relationships and fully understand the case at hand.

On the other hand, political events seem to have altered the trajectory of government enforcement, particularly in the US. Donald Trump’s shock election victory in 2016 has ushered in a period of uncertainty in the US product liability space. Supreme Court justice Neil Gorsuch’s confirmation shifted the balance of the bench in the favour of conservatives and will likely result in a more favourable environment for corporate interests. Additionally, the market expects the Trump administration to adopt a more laissez-faire approach to regulatory framework, particularly in respect to the pharmaceutical and medical device industries. President Trump himself has been rather vocal in his efforts to reduce the regulatory burden, signing an executive order in February 2017 prompting all federal agencies to establish task forces to “alleviate unnecessary regulatory burdens placed on the American people”. This alleviation may be most keenly felt by life sciences clients and their legal counsel. As one respondent noted, “The new administration is likely going to tilt the playing field towards the defence,” as the “FDA will undoubtedly have a different set of priorities”. The market anticipates that while Scott Gottlieb, Trump’s pick for FDA commissioner, is a more conservative and conventional choice, he may still be charged with introducing significant reform to FDA restrictions and red tape, particularly those relating to the off-label promotion of both drugs and medical devices. Ultimately, while it remains to be seen how the new Trump administration will affect the product liability landscape, practitioners and clients alike will undoubtedly be monitoring the situation closely to assess how the new political tack will affect their businesses and their potential liability in the future.

Life Sciences Product Liability

Medical device and pharmaceutical litigation remains hugely prevalent in the market, despite reports that legal costs and the aggregation of claims in particular has decreased the number of cases brought overall. Litigation funding and an overall desire to pursue claims on the part of certain plaintiffs ensures that the market remains buoyant and looks set to remain so for the coming year.

The growing importance of pre-emption in medical device and pharmaceutical litigation was a particularly hot topic in this year’s research. Federal pre-emption, one of the most powerful weapons in the arsenal of a product liability defendant, can lead to the dismissal of a state tort claim, thereby removing a claimant’s recourse to compensation. Over the past few years, the use of pre-emption has become increasingly prominent in medical device claims and is directly affecting the number of claims going through to trial. As one practitioner mentioned, “Although fewer claims are making it to trial, the body of medical-device appellate work has certainly increased and now occupies a greater portion of my time.” In addition, federal pre-emption in relation to generic pharmaceutical products prompted much uncertainty and speculation, with one interviewee maintaining, “The area is likely to change drastically in the next few years and everybody is very cautious and apprehensive to see what will happen in the next year or so.” The appointment of Neil Gorsuch seems to have only increased speculation on the matter, with lawyers claiming that it could be a “game changer”. Ultimately, the way in which pre-emption is applied to generic manufacturers could have a significant impact on pharmaceutical product liability litigation and mass torts, so lawyers will have to continue to monitor developments to ensure they remain abreast of developments in this space.

In the US, the prevalence of multidistrict litigation and aggregated claims in life sciences-related product liability litigation seems to be continuing at pace. While the aggregation of cases in a single court allows a judge to keep a tighter control over proceedings and enable counsel to focus their efforts on one significant case, it can also prove to be something of a double-edged sword. As one practitioner suggested, aggregated claims can lead to the defence effectively “wiping out mass litigation”, as was the case with Pfizer’s defence in the consolidated Zoloft litigation. It can also be “astronomically expensive” for clients if they lose the case. Conversely, some interviewees reported that there seems to have been a trend away from the aggregation of claims in the past year or so. In certain US states, the days of plaintiffs’ counsel attempting to combine claims seem to be gone, and interviewees suggested that they are now seeing more and more consolidated state litigation. Defendants are now ferociously battling on multiple fronts and this “multi-headed beast” places further strain on them and their legal counsel. With aggregated claims enabling defendants to focus resources and attention on one larger case, plaintiffs’ firms, aware of the difficulties created by fighting on multiple fronts, are moving away from grouping claims in such a manner to increase their chances of success.

Big Data, Technological Innovation and Product Liability

Emerging technology’s impact on the product liability space continues to be an ever-present trend experienced by practitioners in this field. As robotics, big data and the internet of things (IoT), along with emerging technologies such as driverless cars and 3D printing techniques, are all becoming more prominent in today’s increasingly digital world, the market is beginning to recognise that these products pose interesting liability issues.

The advent of autonomous vehicles continues to pose complex questions as to the future of product liability regimes. A series of incidents involving Tesla’s self-driving cars, including a fatal crash in May 2016, served to bring the issues into sharper focus. In the UK, the government is actively looking to legislate to clarify the liability issues surrounding driverless cars. February 2017 saw the UK government publish the Vehicle Technology and Aviation Bill to encourage driverless car companies to develop and test autonomous vehicles in the UK and pave the way towards the driverless road networks of the future. The bill’s most significant contribution has been to clarify how liability for accidents involving automated vehicles will be apportioned in the future. The government’s single insurer method, which places responsibility for damages on insurers rather than manufacturers, is hailed by market commentators as a positive step for consumers, as it will undoubtedly reduce the time and difficulty of filing a claim in the event of an accident involving an automated vehicle. That being said, the bill placed no restrictions on insurers filing product liability claims against manufacturers in the hopes of recovering damages payouts. Therefore, in the future, although autonomous vehicle manufacturers themselves will see fewer claims from individual consumers, they may see more comprehensive liability claims from insurers.

The European Commission’s public consultation on “Building the European Data Economy” seeks to canvass opinion to help shape the EU’s line of policy and strategy towards the European data economy. A key issue at the heart of the consultation is the emerging challenges around the IoT and robotics liability and, while the outcome of this consultation remains to be seen, clearly the EC recognises the need to address the issue now and possibly broaden the scope of the Directive on liability for defective products. The biggest challenge facing the EC is the delicate balance that needs to be struck between technological advancements and the allocation of strict liability for damages, including imposing liability on service providers that currently fall outside the scope of the Product Liability Directive. Furthermore, the evaluation process may look to provide further input on a uniform strategy to handle cross-border issues, as the current form of the Product Liability Directive does not provide any EU-wide procedural framework. Interviewees seemed confident that the EU Product Liability Directive would be revised following the consultation and evaluation process but were unsure as to exactly what form these reforms would take. Ultimately, it is clear that increasing digitisation in the consumer products arena is something that clients and their legal counsel ignore at their peril. The seemingly limitless opportunities also present new risk and liability issues, and clients and practitioners should monitor legal and regulatory developments, as well as evaluating their own exposure to these issues, to improve fortunes in the future.

The Legal Marketplace: Consolidation and Virtual Law Firms

Two trends characterise the product liability legal market at present. Greater sophistication and a desire to streamline relations with external counsel on the part of clients is prompting them to deal either with larger firms more well equipped to handle litigation on more than one front, or more flexible and non-traditional virtual law firms. In response to these shifting client expectations, the legal market is undergoing a period of consolidation. For example, the $1 billion merger of Washington, DC-based Arnold & Porter and New York-headquartered Kaye Scholer in January 2017 saw two litigation powerhouses combine to create a firm able to compete on the international stage. One practitioner reported that market contraction is resulting in fewer players, particularly those operating in high-stakes pharmaceutical litigation, and fewer lawyers at the traditional firms acting in this space. While this can offer “great savings to defendant companies” and even the law firms themselves, it does mean, in one sense, that competition is narrowing and becoming more focused between fewer firms well equipped to handle multi-jurisdictional litigation.

On the other hand, a number of practitioners in the US reported that clients, in response to the increasingly litigious atmosphere, are turning to more creative legal strategies. One of these is the trend towards use of a virtual law firm model to manage nationwide and international product liability defence work. First appearing as a response to the 2008 financial crisis, the virtual law firm model is a nebulous concept developing hand in hand with the growing sophistication of legal technology. It is characterised by the lack of a traditional office space, with web-based interactions between peers and secure client portals enabling lawyers from diverse firms and specialisations to interact, “share big picture strategies” and defend client interests. As one market commentator remarked, “Our business has changed dramatically. The practice has moved much more towards a model of virtual firms working together so that in any given case we are working alongside teams drawn from multiple different firms.” Ultimately, while the virtual law firm model is neither a new phenomenon, nor are its practices as alien as some would like to believe, client expectations in the product liability space have certainly shifted. Price-conscious clients seem to be turning to these more dynamic and collaborative methods as an alternative to the traditional, well-established firms. Clients are given a freer hand than ever before to customise their teams of legal counsel, with technological advancements aiding the development of client relationships and collaboration. Practitioners are increasingly being encouraged to embrace the trend and bow to client needs to ensure their survival in the competitive legal market.

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All in all, 2017 looks set to be an interesting year for product liability lawyers. As innovative technologies, big data and autonomous products all challenge pre-existing legal frameworks in place to deal with liability issues, impetus to address the issues and reform accordingly on the part of regulatory authorities will undoubtedly affect clients and their legal counsel. However, an increasing desire to encourage and promote certain jurisdictions as possible havens for high-technology companies, alongside political developments, particularly in the US, could prove to tilt the playing field towards corporate interests, and it remains to be seen how these issues will play out in the future. Additionally, the product liability legal market seems to be undergoing a formative period of change, with on the one hand certain law firms looking to consolidate to offer more strength in depth; and on the other hand clients turning to more creative approaches to handle litigation on multiple fronts.

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