What's better than winning a lawsuit brought against you or your company? Not having the suit in the first place. Effective loss prevention costs money but is still a lot cheaper than even a lawsuit you win--let alone one you lose. And that is true even if you have product liability insurance. Many companies realize this and have begun evaluating their design and manufacturing practices and policies. But because products are made to be sold, sales practices need equal attention.

Much of what you can do to help your case starts with common sense. For example, remember that even though your company is in the business of selling products, you should think twice about selling to customers whose facilities how clear evidence of poor or non-existent maintenance. There is no legitimate reason to believe that your products will receive any more attention than that given to other areas of the customer's facility. Even the profit from several sales will look like fool's gold in comparison to the time you will devote to defending a single lawsuit.

With this in mind, it is rarely a good idea to isolate the sales function from engineering and design. Sales people need an incentive to prevent over-selling the ability of your product's performance. Keeping the sales person in the loop increases their responsibility for a safe installation as opposed to the "now it's sold, you deliver" approach.

In-plant advice

When making an on-site visit and asked to offer an opinion about an installation or problem not involved in the purpose of your visit, be careful unless you have been given a full, fair opportunity to examine the installation or problem. The employer of an injured employee will not hesitate to blame you and put words in your mouth about your having "blessed" the installation or dismissed the problem as not affecting safety.

You should consider responding to requests to check this or check that while on site for another problem by offering to do an audit of the plan in your area of expertise. This will create sales opportunities and at the same time put you on record as offering an in-depth audit of the customer's facility.

Once you have been called into a customer's plant to discuss a particular application for a particular machine designed to do a specific task, keep careful notes that are descriptive enough to enable you several years later to identify where your product was supposed to be installed. It is not uncommon for plant equipment to be cannibalized--with your product ending up in an application you would never have recommended.

Literature and documentation

When preparing instruction manuals, be careful to include cautions and warnings. Warnings should be reserved for events that can cause serious physical harm and/or serious property damage. Cautions should be used for less-dramatic events that can occur. The process of deciding when to caution or warn should be carefully thought out. Low-frequency occurrences with very serious risks are usually better candidates for warnings than high-frequency events with very little risk, especially where the risk is obvious. It is a close call to determine when you are overdoing it to the point that warnings/cautions lose their effectiveness. When the product is delivered, you should have a separate form (which is saved forever) on which your customer acknowledges, in writing, receipt of the instruction manual. Be very careful to include warnings from a component manufacturer in your manual, especially when the component supplier's manual is not passed along to your customer.

Every instruction manual should contain a prominent declaration that no one should work on or with the product without first reading and understanding the instruction manual. The product should also contain a warning decal that contains the same caveat. If there is no convenient area to place a decal, tag the product with a wired-on warning. Parts books should always list instruction manuals and warning labels as replacement parts.

Exercise caution in the use of cartoon figures in operating manuals when depicting unsafe practices. A plaintiff's counsel can argue that the cartoon characters minimize the intended communication of a dangerous practice and trivialize the risk.

Discourage sales personnel from keeping private files. When sales people retire or leave for another job, these files tend to get lost, misplaced, or destroyed. The information in those files may be important down the road. Certainly, information generated from customers by your sales people belongs to the company, not the salesperson.

Keep a log (and reconstruct one if none exists) of the names of sales/repair personnel who called on specific territories together with dates. Ex-employees are sometimes needed as witnesses. A new sales manager won't have any way of knowing who called on whom and when.

It's a good idea to investigate whether your company has saved all back copies of your comprehensive general liability policies. If not, check with your agent. Older occurrence policies are an asset of your company, particularly in the toxic tort area.

Further preventive measures

If your products can be equipped with optional equipment that would make operation safer, the customer should be told of the availability of the option and, as with the instruction manual, asked to sign off that you have discussed the option. It is easier to get people to sign off that they have been informed than it is to sign off than an option has been rejected. No order should ever be filled if it does not contain a customer's indication that they have been informed of the existence of a safety option.

If you expect a product to be maintained by plant maintenance personnel, you should offer (even if you render a charge) a training and certification program.

Designate an employee whom you believe will be with your company for the long haul to serve as a liaison with defense counsel and function as an in-house expert in the courtroom. This person should:

*become knowledgeable in human factors engineering
*join appropriate industry organizations
*serve on the committee of those organizations, and
*subscribe to and read the journals appropriate to your industry. All of these efforts will pay off in the courtroom.

If the manufacturers you represent conduct seminars or clinics for your sales and/or repair people, invest the money necessary to keep them up to date. Even if, on occasion, it would seem to be a waste of time, it sounds good to a jury that the investment was made.

A call to action

As soon as you receive any notification of an accident involving your product, discretely obtain as much information as you can, including pictures, etc., even if there is no current indication that the injured part intend to sue.

If you are sued, try to have some input with your insurance company concerning the lawyer the company intends to hire. Remember that you or your insurance company should be hiring a lawyer, not a law firm. If the trial lawyer uses associates and/or paralegals to contain costs, will the lawyer be involved or delegate the major events in the case? If your insurance policy gives the insurer the right to select counsel, ask the insurer the following:

  • Is the lawyer an employee of the insurance company and, if so, does the lawyer specialize in product liability cases?
  • What is the lawyer's case load?
  • Does the lawyer actually try cases and, if so, when were the last three tries, and what type of cases were they?
  • What is the lawyer's hourly rate, and does the insurance company get a special rate? The bottom line is that you should insist on a vigorous defense by a skilled trial lawyer who will try your case.

"You should think twice about selling to customers whose facilities show clear signs of poor or non-existent maintenance."

"It is not uncommon for plant equipment to be cannibalized--with your product ending up in an application you never would have recommended."

"Parts books should always list instruction manuals and warning labels as replacement parts."

This discussion is general in nature and should not be relied upon by you or your company because it may not be suitable for your particular business. Indeed, the information contained herein, if implemented, could be harmful to your company under the proper set of circumstances. You should consult with counsel skilled in the area of product liability.

Harry T. Quick is a lawyer with Cleveland's Benesch, Friedlander, Coplan & Aronoff, and a member of the Defense Research Institute. He is a fellow in the American College of Trial Lawyers and a member of the Federation of Insurance and Corporate Counsel.