It’s no secret that the U.S. toy industry has been wrestling with product liability issues associated lead based paint used by their foreign suppliers.  Indeed, the health and safety of our children is so important that it has caused a shake-up at the Consumer Product Safety Commission and spawned pending legislation in Congress. 

Unfortunately, this “toy story” is an example of how cheap off-shore labor in unregulated environments can have unintended consequences when the exports subsequently land in markets with higher safety standards.  These disappointed expectations create legal liability, triggering product recalls and lawsuits.  It’s a cautionary tale of how the cheapest solution is not always the least expensive.  But in this case, one company is turning lemons into lemonade. 

Instead of trying to fight the lead paint battle by challenging test results, trivializing their significance, or blaming suppliers, Toys “R” Us took initiative last week and in a judo style flip turned the issue into a marketing coup.  

It voluntarily imposed strict guidelines on its vendors to insure compliance with higher safety standards aimed at reducing lead content in toy coatings.  It also executed a pre-emptive strike on another hot button issue: cadmium.  It instructed its vendors to take immediate steps to eliminate the use of nickle-cadmium batteries from all products manufactured exclusively for Toys “R” Us.  

Being proactive in addressing this product liability issue turns a growing concern and legal liability into a competitive advantage.  It helps build consumer confidence and helps burnish the company’s image as trustworthy.  It also distinguishes Toys “R” Us favorable by carving out a market segment and establishing itself as a leading source for safer toys.  As a new grandmother, I can tell you that such peace of mind is priceless.

Best of all, the company gets mileage out of regulating itself before Congress does it for them and making the announcement on the eve of the Annual American International Toy Fair to maximize buzz probably didn’t hurt either. 

Turning a legal liability into a competitive edge is what Legal Leverage(R) is all about; but you can’t achieve legal leverage without sufficient legal literacy to know where you’re at risk. 

A big Legal Literacy tip of the hat goes to Toys “R” Us this week.  Bravo!

I apologize for my month long absence.  It’s hard for me to believe it’s already April. 

This past month, in addition to my full time job, I have been preoccupied with a massive home remodeling project (it’s given me a new appreciation for contracts) and consumed by March Madness. 

For international readers — March Madness refers to the super bowl of college basketball.  Although teams vie within their regional conference for bragging rights to be conference champs, in March the top 64 teams in the country compete for the NCAA championship.  The whittling down process sparks old college loyalties and consumes sports fans with bracketology, office betting pools (even though they’re illegal) and predictions about which teams will qualify for the ”Sweet Sixteen,” the “Final Four,” and who will ultimately prevail as champ.

Last night the Florida Gators men’s team was victorious.  Congratulations to them on last night’s win as well as winning 2 years in a row.  Tonight it’s the women’s turn.  The Tennessee Volunteers will match up against the Rugters Scarlet Knights (go Rutgers!).

Yup, following both the men’s and women’s tournaments left little time for blogging.  But that’s not to say that important issues — like compliance — weren’t top of mind.  They were.

How come a player can commit 3 fouls that half the people in the arena can see, but the player doesn’t get called on . . . until they travel?  I mean, there there are with how many people watching them, including the referees and they commit a foul.  OK, some of those fouls may be accidental and some are intentional.  When the refs are too strick you hear, “Come on, let ‘em play.” So inbetween those two extremes is room for lots ”hard” play that gets rewarded when the ball goes through the hoop and points are scored. 

It makes me wonder why so players risk a foul and risk being ejected (fouled out) from the game after 5 fouls even though they know lots of people, including referees paid to look for fouls, are watching?  Do they look for opportunities to break the rules?  Is it OK to break the rules as long as you don’t get caught?

Hmmm, and if this “play hard” culture is embraced and idolized by the fans, how much of it is transferable to the work hard/ play hard corporate culture?  Are the company policies, industry regulations, and the law merely a roadblock to profits?  Is compliance a losing battle?

It really depends on  how you score points in your organization.  If it’s all about profits at any cost it will be impossible to build more than a superficial culture of compliance.  If, on the otherhand, your corporate score card is more balanced (to borrow a phrase from Robert Kaplan) the trade-offs will be appreciated and the points will be more evenly distributed.

How the score stacks up in the end depends on the incentive structure that is created by the organization’s leaders.  The circumstances will help shape the behaviors.  What does your company’s scorecard look like?