Interview on the legal perspective of business issues.

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:

Gerry: Another common problem I see is how companies deal with customer complaints. Consumers in both countries seem to be too litigious and think companies have such deep pockets they can sue over every product defect and get a large settlement. The old “I’ve got a bug in my soup” story. If the company settles all the time they are vulnerable to copycat suits. If they defend aggressively they get a PR black eye. How do you advise companies in these scenarios?

Jeff: My answer will not to be one answer that fits all.  Having served as a company General Counsel responsible for protecting the company from litigation and working to avoid litigation when possible, I can share a few of my suggestions.  My initial premise is that we business lawyers should be in the business of helping companies avoid litigation if at all possible.  Litigation is expensive, time consuming, gives up control of the resolution process, and takes the company’s focus off of its real business; making products, providing services and helping others achieve commercial success.  Although I am now an outside lawyer, I still think it is almost always in my clients best interests to attempt to resolve customer complaints and disputes through creative business solutions, or if needed, by monetary settlements. The counter to that suggestion is as you have noted that it may encourage copycat complaints and lawsuits. There are times when a company needs to defend its legal position aggressively.  Clearly if you have a dispute that can jeopardize the existence of your company, its business, a product line, or if the ability to construct a business resolution is not possible, then you must devote whatever resources are needed to ensure success in the litigation.  When it comes to copycat litigation, I suggest that a clear understanding of the risk be discussed and that a plan for resolution be implemented.  I attempted this at a former employer with retail establishments where we received over 2,000 customer complaints per year and typically had 40 to 50 cases in litigation at any one time.  Although the implementation of our plan was not exactly as I had envisioned, this type of decision-tree process can help when a company considers whether to defend each and every lawsuit, settle each and every lawsuit, or preferably implement a plan that includes both a litigation and settlement strategy.