Transcript KEEP YOUR GUARD UP: Daily Business Practices to Limit Your Liability Exposure By: Eugene M.

KEEP YOUR GUARD UP:
Daily Business Practices to Limit Your Liability
Exposure
By: Eugene M. LaFlamme
Offices in Milwaukee, Chicago, Portland and Albuquerque
IMPACT OF LITIGATION?
• Civil litigation costs are equivalent
to about 2% of the U.S.’s GDP.
• Current U.S. GDP is approximately
$16.8 trillion.
• Litigation Cost = $336 billion.
• Estimated 2.5 million jobs.
*Legal Ethics and Reform: The Indirect Cost of Civil Lawsuits to the U.S. Economy
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IMPACT OF LITIGATION?
• The U.S. has the world’s costliest
legal system.
• It is double the costs in the UK, triple
the costs in France and five times
higher than the costs in Japan.
• Civil tort claims cost the U.S.
economy about $264 billion per year.
*Institute for Legal Reform: Lawsuit Abuse Impact
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IMPACT OF LITIGATION?
• America's tort system imposes a total
cost on the U.S. economy of $865
billion per year.
• This constitutes an annual "tort tax"
of $9,827 on a family of four.
* The Tort Tax, by Lawrence J. Mcquillan and Hovannes Abramyan,
Commentary, WSJ
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LITIGATION STATISTICS
• Suits filed per year (per 100,000):
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U.S. – 5,806
U.K. – 3,681
France – 2,416
Japan – 1,768
• Number of lawyers (per 100,000):
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U.S. – 391
U.K. - 251
France – 72
Japan - 23
Source: Are American More Litigious? Some Quantitative Evidence (2010)
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COSTS OF CIVIL LITIGATION?
What are the costs associated with litigation?
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Attorneys
Experts
Business interruption/inconvenience
Business reputation
Insurance
Damages – compensatory and punitive
Indirect Costs
PROSPECTIVE PLAINTIFFS’
INCENTIVE TO LITIGATE
The American Rule
• Each side pays there own attorney fees and costs.
• Contingency fee cases.
Lawyer Advertising
• Study showed 79% of those polled thought lawyer
advertising encouraged people to sue.
Source: American Association for Justice, also known as the Association of Trial Lawyers of
America
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FUTURE OF LITIGATION?
• 92% of U.S. companies polled predict
that litigation will either rise or
remain the same in the next 12
months.
• Litigation is still the most preferred
avenue to resolve disputes.
* 2011 Fulbright Litigation Trends Survey.
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CURRENT ISSUES AFFECTING THE
HEARTH AND CHIMNEY INDUSTRY
• Proposed Changes to NFPA 211 (2016 edition): Use
of After Market Parts
• NFPA 211 technical met in March 2015, heard public
comments, and seem to be moving forward with
amendment.
• The
Second
Draft
Report
is
supposed
to be posted no later than July 17, 2015.
• 2015 Fall Meeting is when final decision will be made.
• Potential issues????
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CURRENT ISSUES AFFECTING THE
HEARTH AND CHIMNEY INDUSTRY
• Glass front barrier screens
• Requirement took effect January 1, 2015.
• Issue with glass fronts was identified by industry a number of
years ago.
• What should an HPBA business do if it services a glass front
that does not have a barrier screen?
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INSPECTIONS
• NFPA 211
 Level I
Readily accessible
 Level II
Accessible
 Level III
Concealed areas
• Inspection required depends
on work performed.
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NOTICE OF CLAIM OR
INSPECTION
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NOTICE OF CLAIM OR INSPECTION
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RESPONSE TO NOTICE
• DO NOT IGNORE THE LETTER.
• Immediately Notify your Insurer
 Insurer has a duty to provide you with
a defense.
• Institute a litigation hold.
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WHEN TO NOTIFY YOUR INSURER
• Insured’s Duty to Notify.
• Potential implications of failing to
notify your insurer.
 Loss of coverage.
 Spoliation issues.
 Defense team gets a delayed start.
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LITIGATION HOLD
• Work and/or service records.
• Contracts related to insured’s work .
• Training records and certificates for
insured’s employees that worked at site.
• Personnel files for employees that worked
at site.
• Warranty documents.
• Warning documents.
• Product decals.
• Information received from wholesaler or
manufacturer.
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OTHER THIRD PARTIES TO
NOTIFY
• Manufacturer
• Wholesaler
• Distributor
• Other Contractors
• Gas Company
• Suppliers
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PRE-INSPECTION MEETING
• Have relevant documents ready.
• Identify individuals from company that
should be involved.
 Typically a manager and the technician that
worked in the field.
• Meeting will involve your attorney and
expert.
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SITE INSPECTION
• Goal is to determine the origin and cause
of the fire.
• Most inspections last at least a full day.
• Multiple parties will be in attendance.
 Each party has a different agenda and interest.
• Attorney and expert role.
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INSPECTION EXAMPLES –
WHAT’S WRONG HERE?
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INSPECTION EXAMPLES – WHAT’S
WRONG HERE?
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INSPECTION EXAMPLES –
WHAT’S WRONG HERE?
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INSPECTION EXAMPLES –
WHAT’S WRONG HERE?
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WHAT HAPPENS AFTER THE
INSPECTION
• Evidence from the inspection will likely be
examined further.
• Claimant will identify target defendants.
May try to settle claim pre-suit; or
Will simply file a lawsuit.
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WHAT IS RISK
MANAGEMENT?
The
identification,
assessment,
and
prioritization of risks followed by a
coordinated and economical application of
resources to minimize, monitor, and control
the probability and/or impact of risk events.
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MANAGE RISK: INSURANCE
• Insurance policies provide companies
with protection should an accident
occur.
• Allows companies to spread the risk
of loss amongst each other to reduce
exposure.
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1ST PARTY v. 3RD PARTY
COVERAGE
• 1ST Party Coverage
 Coverage for accident, injury, or loss
whether caused by itself or someone
else (third party).
• 3RD Party Coverage
 Coverage for claims brought by a third
party.
 Commercial General Liability policies.
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CGL POLICIES – WHAT ARE
THEY?
• Typically Occurrence based.
 Occurrence v. Claims made policies.
• Designed to protect businesses from liability to
3rd parties.
• Claims usually involve bodily injury or property
damage.
• Professional liability, contractually assumed
liability, warranty, and faulty workmanship
claims are usually not covered.
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PRIMARY BENEFITS OF CGL
COVERAGE
• Indemnity
 Will pay benefits for a covered loss up
to the insurance policy’s limits.
• Duty to Defend
 If a claim or lawsuit is filed against a
policy holder, the insurer has a duty to
defend the insured against the claims.
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DUTY TO DEFEND
• Outside Key Players.
 Insurance Adjuster or Claims Handler
 Attorney
 Experts/Investigators
• Internal Key Players.
 Point of contact at company
 Corporate counsel
 Risk manager
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LEVELS OF INSURANCE
• Primary Insurance
 Attaches immediately upon the loss or
an event giving rise to liability.
• Excess Insurance
 Provides coverage above the primary
insurance levels.
• Umbrella Insurance
 Generally similar to excess insurance
except that it can also provide coverage
for areas in which there is a gap of
coverage in the primary policy.
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POLICY LIMIT
CONSIDERATIONS
• Premium Cost.
• Size and nature of business.
• Types of risks the business
may face.
 For the sweep and
hearth/fireplace industries this
includes fires, explosions,
death, burn injuries, other
personal injuries, and property
damage.
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HOW MUCH IS ENOUGH?
• Too Much Insurance v. Not Enough.
• State liability laws vary greatly.
 Joint and several liability.
 Pure comparative.
 Modified comparative.
 Contributory negligence.
• NE, N.D. – 50%; WI, IA, MN – 51%; S.D. – barred if
more than “slightly negligent.”
• Protect business and individual assets.
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TENDERING DEFENSE FOR
OTHER INSURANCE
• Additional Insured.
• Vendor’s Endorsement.
• Indemnity.
 By contract between parties.
 By insurance.
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SELECTION OF COUNSEL
• Familiarity With Product or Service
• Specialists v. General Litigator
• Past Relationships with Experts
• Past Relationships with Insured
• Panel Counsel
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SELECTION OF EXPERTS
• Type of Claim.
 Complex fire/explosion accident or
general car accident.
 Potential damages at issue.
 Company’s estimated risk.
• Company’s involvement in selecting
certain experts.
• In-house v. Outside Experts.
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MANAGE RISK: TRAINING
NFI Certifications
– Gas, pellet and wood.
• NFPA 211.
• In house training.
• Manufacturer training programs.
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MANAGE RISK: TRAINING
• Customer Education
 Product manuals
 Instructions
 Pamphlets/decals
 Communication
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MANAGE RISK: DOCUMENTATION
• Inspection and Service records
 Notes on inspection
• Training records
• Personnel files
• Product information
• Photographs
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PHOTOGRAPHS
VS.
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IMPACT OF BAD LOSS ON BUSINESS
• Lawsuit damages
• Increased insurance premiums
• Loss of insurance coverage
• Negative media coverage
• Civil fines
• Criminal exposure
• Loss or sale of business
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HOW TO REDUCE RISK OF BAD LOSS
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Focus on Safety.
Proper employee training.
Record Keeping.
Inform and educate customers.
 Warnings
 Customer contact and relations
• Product development.
• Compliance with federal, state and local
regulations.
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QUESTIONS?
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