This month, we discuss the need to critically examine your corporation's legacy liability history. We suggest the need to look backward (and then forward) with respect to worldwide operations. Set out below are examples of the evolving global changes with respect to personal injury claims.
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“Risks and Opportunities From Personal Injury Claims Around the World” (Corporate Counsel, May 2005)
This month, we discuss the need to critically examine your corporation's legacy liability history. We suggest the need to look backward (and then forward) with respect to worldwide operations. Set out below are examples of the evolving global changes with respect to personal injury claims.
This month, we discuss the need to critically examine your corporation's legacy liability history. We suggest the need to look backward (and then forward) with respect to worldwide operations. Set out below are examples of the evolving global changes with respect to personal injury claims.
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 11 fear of cancer, 11 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 11 Victim's rights 11 groups working with lawyers and experts. One graphic example of 11 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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