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Risks And Opportunities From Personal

Injury Claims Around The World


W
e regularly use this space to discuss legacy
liability issues, and related litigation topics.
The general topic this month is the need
to critically examine your corporation's legacy liability
KIRK T. HARTlEY
history. This time, however,
we suggest the need to look
backward (and then forward)
with respect to worldwide
operations. Many are not yet
motivated to invest the time and money to prepare for
the next wave of litigation, so set out below are examples
of the evolving global changes with respect to underlying
personal injury claims.
Global Developments Related to
Personal Injury Utigation
There are evolving changes in worldwide approaches
to underlying personal injury claims. For example:
EU countries and companies are staking out new
positions on "mass" claims. The Netherlands is set
to approve class action settlement procedures, and
insurers and overseas drug companies are helping it
to happen in order to facilitate a DES settlement for
about 50 million. Meanwhile, Sweden now permits
consolidated claims, and opt in classes. Germany is
using "test cases" to resolve shareholder litigation.
Class action legislation was introduced in Italy, but
did not pass. President Chirac has made comments
about some kind of change to permit "mass"
claims.
Senior executives have faced criminal
tions in at least the US, Brazil, Indonesia,
and Italy for allegedly exposing employees and
others to "dangerous" conditions.
The House of Lords has ruled that British courts
could and should take jurisdiction over personal
injury claims brought by South African natives
A7 May 2005 CORPORATE COUNSEL
against UK companies.
Courts overseas are embracing claims for
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fear of
cancer,
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and "pain and suffering," sometimes citing
US caselaw as persuasive precedent.
US and UK bankruptcy courts are being used
to shed worldwide tort risks, and a US law
review .article proposed US legislation to resolve
global tort claims.
Myths About Other Countries
There are too many myths and misunderstandings
regarding legal topics outside the US. For example:
Large, well-financed plaintiffs' firms are not
"unique" to the US. At least one UK firm now
exceeds BOO employees with 20 or more offices.
How many times have you heard that contingent
fees only exist in the US? In fact, the plaintiffs' bar
in Europe is providing effectively the same litiga-
tion financing that exists in America. For exam-
ple, perhaps the largest plaintiffs' firm in the UK is
the Thompsons firm. One section of its web site
section is devoted to asbestos litigation, and its
website tells some prospective clients it can rep-
resent them on a "free" basis. See
(http1/www.thompsons.law.co.uklltext/1009000 I.
htm).
If that's not enough to dispel the myths about law
firms financing of claims, consider the potential fall-
out from a new proposal allowing law firms in the
UK and Wales to have outside investors buy own-
ership stakes in UK law firms. The British govern-
ment embraced the proposal in mid March. The
results so far include include articles in the Financial
Times and Law.com calling it "the biggest shake-up
of legal services for decades," and speculating about
venture capitalists and others investing in
plinary, entrepreneurial UK law firms. e.g.,
http://news.ft.com/cmsls/37763342-99ae-11 d9-
ae69-00000e2511 cB.html. Imagine what might
happen if members of ATLA litigation groups invest
in overseas law firms, and then share facts and
techniques to help grow the value of their invest-
ments.
Some are less worried about the expense of claims
in the UK because the government pays most med-
ical expenses. But, that situation is changing. The
British Government was planning to allow its
National Institutes of Health to recoup medical
expenses from employer's liability insurance begin-
ning on April I, 2005. The government recently
announced it is postponing that approach until
October 2006, but said it remains jjcommitted to
the principle of 'polluter pays."'
The US is not the only place with
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Victim's
rights
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groups working with lawyers and
experts. One graphic example of
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Victim"
activism in Europe is the website operated by
the International Ban Asbestos Secretariat
(I BAS). See http://www.ibas.btinternet.co.ukl.
Less obvious is I BAS' connection to the United States
litigation industry. The leader of the website (Ms. Laurie
Kazan-AIIen) is related to a leading American plaintiffs'
lawyer, Steve Kazan of Kazan McClain in California. And,
last month, Mr. Kazan provided quotes and more for arti-
cles in Australia newspapers regarding his firm targeting
an Australian business involved with asbestos.
A Real World Example of Global
Legacy Liabilities
The Federal-Mogul bankruptcy provides a real world
example of global risks and opportunities for legacy
liabilities. Federal-Mogul is in bankruptcy in part because
-in the late 1990s - it bought the world's largest former
"asbestos company," Turner & Newall. Apparently some
thought the deal "safe" because the seller included a $500
million insurance policy specific to asbestos claims. The
claims against Turner and others, however, soon exceed-
ed expectations and Federal-Mogul went into bankruptcy.
Of special note here, Federal-Mogul is in international
legal wars that include deciding how much it will have to
set aside for "ROW' asbestos claims. ROW? It means
claims from the "rest of the world."
Opportunities and Risks
T oday's world demands a global view. Business
risks exist, and your company can look ahead and set
aggressive, creative, global policies and practices to
help avoid personal injury litigation and preserve its
giobal enterprise value. Your company can work with
experts to really understand the scope of liabilities
acquired through past m & a deals, and to identify the
due diligence today's world really demands so current
deals produce the expected ROI.
There also are competitive opportunities for
facturers, distributors and miners to legally alter the
scope of their financial risk with respect to products
sold decades ago. Some multinational companies have
eliminated or reduced their financial risks from
al injury claims through strategic bankruptcies,
rate dissolutions, "bolt-ons" and "liability trusts." One
key to acting strategically is truly understanding the lia-
bilities absorbed or assumed during global expansion
over the last 20 - 40 years.
In short, some companies have looked backwards
very carefully, and now are blazing a trail going for-
ward. Litigation forced some companies to look back-
ward, but others have done so voluntarily. Knowing
the facts is key to perceiving opportunities and perhaps
avoiding risks. Will your company be able to compete
with businesses that have already used techniques to
shed expenses for "legacy liabilities?"
Kirk T. Hartley is a partner with Butler Rubin SaharetH &
Boyd LLP, a Chicago litigation boutique. Mr. Hartley
practices in the (lrm's Legacy Liability and Product Liability
Practice Groups. The views expressed are personal to
the author.
BUTLER RUBIN
e.xcellente in litigation''"
CORPORATE COUNSEL MAY 2005 AS

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