Product Liability Verdicts Are on the Rise but There Are Ways to Avoid Them

Product Liability Verdicts Are on the Rise, but There Are Ways to Avoid Them

The world of product liability is rapidly evolving, with a concerning surge in high-value verdicts. In 2024 alone, product liability cases accounted for an astonishing $13.7 billion in verdicts. This escalating trend demands that manufacturers, distributors, and retailers prioritize proactive strategies to mitigate risks and safeguard their businesses. Understanding the driving forces behind these rising verdicts and implementing robust preventative measures is crucial for long-term success and sustainability.

Understanding the Rising Tide of Product Liability Verdicts

Several factors contribute to the increase in product liability verdicts. One significant aspect is the changing legal landscape, with plaintiff lawyers strategically leveraging social, regulatory, and legal environments. Attorney advertising has amplified injured parties’ expectations, while claims aggregators identify new plaintiffs, escalating the stakes. Moreover, litigation funding has transformed the tort system into an investment mechanism, fueling more costly lawsuits.

Another crucial element is the increasing consumer awareness and willingness to hold manufacturers accountable. Data indicates an overall increase in U.S. product liability cases, from 3,342 in 2013 to 5,826 in 2022. This heightened awareness, coupled with evolving regulatory standards, underscores the need for companies to prioritize product safety and transparency.

Furthermore, shifts in jury pool demographics may also play a role. Millennial jurors tend to be more pro-plaintiff than previous generations, potentially influencing verdict outcomes. Additionally, the rise of “nuclear verdicts”—those exceeding $10 million—presents a significant risk, particularly for middle-market companies.

Key Areas of Product Liability

Product liability risks typically arise from three primary areas:

Design Defects: Flaws in a product’s initial design can create inherent hazards for consumers.
Manufacturing Defects: Errors or deviations during the production process can lead to substandard or dangerous products.
Marketing Defects: Inadequate warnings, unclear instructions, or mislabeling can result in consumers misusing products, leading to injuries.

Proactive Strategies to Avoid Product Liability Claims

While the rise in product liability verdicts presents challenges, businesses can implement several strategies to mitigate risks and protect themselves from costly lawsuits.

1. Prioritize Product Safety and Quality Control:

Rigorous Testing: Implement comprehensive testing protocols throughout the product development lifecycle. Every product should undergo thorough testing before hitting the market.
Supplier Management: Establish a risk transfer program to avoid financial vulnerability to damages and claims caused by suppliers. Companies that import products, components, raw materials, and sub-assemblies may bear sole responsibility for certain safety requirements.
Quality Control Programs: Implement robust quality control programs with regular inspections, testing, and monitoring of products. Maintain high manufacturing standards by using premium materials, training employees, and implementing quality control protocols throughout production.
Safety Reviews: Conduct regular safety reviews during the design phase to identify and address potential hazards. Products should comply with industry and government safety standards.

2. Clear and Effective Communication:

Warning Labels: Design clear, compliant warning labels with concise language and effective graphics to inform users and reduce misuse risks. Ensure labels are prominent, understandable, and adhere to industry standards.
Instructions and Documentation: Provide transparent product information, including clear warnings and usage instructions. Develop written procedures and instructions that describe the flow of the product through the manufacturing process and quality control steps.
Honest Marketing: Ensure marketing materials are accurate and avoid false or misleading claims. Sales and marketing teams should be well-versed in advertising regulations to ensure that their messaging is compliant and transparent.

3. Risk Management and Insurance:

Product Liability Insurance: Secure product liability insurance to protect against claims related to defective products. This insurance provides financial protection against claims related to defective products, covering legal defense costs and damages awarded to consumers.
Product Recall Insurance: Consider product recall insurance to cover the costs of removing dangerous products from shelves or homes.
Contractual Agreements: Draft comprehensive contracts with liability waivers, indemnification clauses, and clear safety compliance requirements to limit exposure. Check vendors’ contracts and insurance levels to ensure adequate coverage.

4. Continuous Improvement and Monitoring:

Customer Feedback: Enable and review customer feedback to identify and resolve potential risks early. Analyze customer complaints and reviews to identify and resolve potential risks early.
Record Keeping: Keep essential records, including customer design specifications, product orders, manufacturing processes, and quality control steps. Establish a document retention policy to help ensure preservation of documents important to the investigation and defense of product liability claims.
Stay Informed: Stay up-to-date on the latest product liability laws, regulations, and trends.

5. Ethical Considerations and Internal Communication:

Avoid “Bad Facts”: Be sensitive in internal communications and avoid disparaging customers or blaming injured parties. Juries are more likely to award higher damages, including punitive damages, if companies appear callous or negligent.
Holistic Approach: When appropriate, take a holistic approach and show how the company has provided help for people and the community.

The Role of Legal Counsel

Partnering with experienced legal professionals is essential for navigating the complexities of product liability law. Attorneys can help businesses:

Understand product liability laws and develop strategies to minimize the risk of litigation.
Review contracts and insurance policies to ensure adequate protection.
Develop and implement risk management programs.
Defend against product liability claims.

Conclusion

The rise in product liability verdicts presents a significant challenge for businesses. However, by prioritizing product safety, implementing robust risk management strategies, and seeking expert legal counsel, companies can mitigate risks, protect their bottom lines, and foster consumer trust. A proactive approach is not only essential for avoiding costly lawsuits but also for building a reputation for quality, safety, and ethical conduct.

Product Liability Verdicts Are on the Rise but There Are Ways to Avoid Them