Advice from the Top: Training of staff key to avoiding lawsuits
— -- This story was originally published on Sept. 15.
Lawsuits are not going away. Lloyd's of London, which sells specialty insurance to businesses in 200 countries and territories, recently released a global survey of executives who say that the rest of the world is starting to catch up to the USA in lawsuits, and they say that is driving up costs and stifling risk-taking. What are companies to do? Lloyd's CEO Richard Ward, 51, spoke from London with USA TODAY management reporter Del Jones. Following are excerpts, edited for clarity and space.
Q: Is the USA no longer the most litigious country in the world?
A: The evidence suggests that litigation costs are the highest in the U.S., but unfortunately other regions seem to be catching up. One survey found that the U.S. tort system costs each U.S.. citizen $625 a year. That has certainly made products more expensive. States with the highest tort costs experience the lowest standard of living. Our survey showed that 42% of executives consider it a major disincentive when looking to do business in your country.
Q: What one type of lawsuit poses the biggest threat?
A: There is a range. Technology risk involving technology security, nanotechnology issues. Environmental risk involves climate change and pollution. And, of course, corporate governance, especially involving communication with shareholders, disclosure and transparency.
Q: Really? Companies should brace themselves over global warming lawsuits?
A: There is a growing risk that companies will be held liable for pollution and environmental damage. Companies have to behave responsibly and think about the consequence of actions and activities.
Q: What about all those smaller lawsuits? Do they add up, or do companies need to worry most about the one, big, back-breaking lawsuit?
A: That's difficult to say because small lawsuits can ultimately become big ones.
Seven out of 10 companies have faced litigation in the past three years. There are many areas to consider, but for a starter, we suggest the three areas: technology, environment and corporate governance.
