Will lawyers inherit the earth?

The issue of public liability is becoming a management preoccupation which is not going to go away.

I sometimes wonder what kind of world our legal system is heading us toward. During a recent bout of procrastination in my office, I cast my mind back over my business career and it struck me how much more complicated management has become in the last twenty five years. We now live in a very litigious society, where there is a trend for people to try to pass the responsibility for their lives onto others and sue for any misfortune that may happen to befall them.

The rules have changed for the legal profession

They can advertise for business now

I think the catalyst for this have been the changes to the regulations that govern the way law firms operate. Consider how they now advertise and tout for particular kinds of business. This is only a recent development — when I was growing-up, law firms were only allowed to advertise their presence in general terms, and not to ‘ambulance chase’, so to speak.

No win, no fee

Another big change has been their ability to charge on a ‘no win, no fee’ basis. Think about it. How many ambit claims are now made by people who figure they may as well ‘have a go’, because if it doesn’t work it won’t cost them anything? The recent attempt by a man in the USA to sue McDonalds because he became obese (I mean, really?) is an example of this kind of try-on.  Do you think fatso would have proceeded if he had to pay the legal fees as he went?

The legal profession is changing rapidly.

Class actions

The final factor is the rise of the so called ‘class action’, where the law firms identify a nice rich target, and then advertise until they find a suitable group of people willing to join the game and then they all sue for the equivalent of the gross national product of New Zealand. It’s a system of wealth transfer, just like a casino.

Don’t get me wrong — if there has been genuine negligence that leads to an individual or a group facing hardship, then I am all for calling in the lawyers — but where does personal responsibility begin and end? Take a hospitality business that holds regular wine tastings as part of staff training as an example: If a staff member becomes an alcoholic later in life, should that business be drawn into a court case as a contributing factor in the development of alcoholism? Those of you who give or subsidise staff knock off drinks should beware here. This is where we’re heading.

Hidden traps

Product Liability

Don’t get caught!

What about the situation where an employer has been acting in good faith and a product they have been producing turns out to be harmful (ie. imagine if schnitzels turn out to be carcinogenic, or something like that). Should that company be held responsible for an unknown danger at the time, if they were acting in good faith? It would be different, of course, if it was proven the product was dangerous and they continued to sell it; that would be both unconscionable and negligent, and damages would be a fair remedy.

The passive smoking case

The recent Australian court cases concerning passive smoking in public bars are interesting to consider in this discussion. The case of Sharp v Port Kembla RSL Club Ltd, a bar attendant who had worked in the industry from 1972 – 95 won $466,000 damages from an employer for throat cancer the court decided was contributed to by her occupation. What struck me when I read this case is that the link between passive smoking and ill health is still the subject of legal debate, and was certainly not recognised or proven at the time of her employment.

Big companies are a prime target

The point here is that all these issues make it quite dangerous to run a business or anything else now, and the bigger the organisation is, and the wealthier it is, the more dangerous it becomes to run it. As a result, the cost of public liability insurance skyrockets and the cost of maintaining the workplace and training managers and supervisors increases disproportionately with the growth in our economy.

Paranoia reigns supreme

In some instances paranoia about public liability is getting farcical. My local council recently went around my area and ground down the footpaths wherever there was the slightest unevenness, to forestall claims from people tripping while walking. Now there are 30 cm polished strips in the places where they have shaved the footpath, which get quite slippery when it rains. We have had to take the responsibility of walking on uneven surfaces since the dawn of humanity. Why can’t people still be responsible for watching where they walk, as they have always done?

Closer to our industry, a recent newspaper article related how the Marriott

Our society has become so litigious that people are starting to become paranoid.

Hotel in London was asking any customer who ordered a rare or medium rare hamburger to sign a legal disclaimer waiving the company’s responsibilities if they suffered food poisoning. If a rare hamburger can provoke this action, the local pie manufacturers must be in a state of total panic.

We are in a very risky industry

Where will it all end? Obviously the legal profession who benefit incredibly well financially from all the litigation are not going to agitate for change; the solution will probably have to be political. Make no mistake, our industry is particularly at risk — where else do you ingest food that has the capacity to make you ill, imbibe liquids that make you fall down (or knock somebody else down), and carry out the transaction with a knife in one hand?

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