No one likes to get sued.  It’s expensive.  It’s time consuming and nobody really wins, except maybe the lawyers.  

Apologizing may sound like a totally a counter-intuitive move.  However, some academic medical centers have discovered they can substantially cut their litigation costs by acknowledging preventable errors and apologizing for their mistakes instead of making excuses and denying them.    

It’s been reported that at the University of Illinois only one patient out of 37 sued after receiving an apology and at the University of Michigan Health System claims and lawsuits declined from 262 to 83 between 2001 and 2007, resulting in a 2/3 drop in legal costs.  Now that’s a cost savings you can take to the bank, including the drop in malpractice premiums.  

The issue of disclosure through apology is not an academic one confined to university hospitals.  Groups like the American Medical Association, the American Hospital Association, and the Joint Commission which accredits hospitals have adopted standards encouraging transparency and disclosure and many hospitals have written policies in compliance.   

Maybe these smarty pants doctors may be on to something.  They are recognizing that nothing morphs a reasonable patient into an indignant one — one who is ready to pull the pin out of the lawsuit hand grenade – than denial and concealment of an error.  Denial provokes fear that it can happen again and the concealment is nothing more than disrespect of the other party.     

Let’s face it.  No one likes being lied to, especially if they are paying the price for your mistake.  It makes them angry.  It provokes outrage.  It’s the kind of negative energy that sends them running to lawyers’ offices.     

You don’t need to be in the medical profession to benefit from the hospitals’ experiences.  The next time a contract dispute arises with a customer or vendor, ask yourself whether a mistake was made.  Be honest with yourself.  The same goes for an employment dispute, or any other business/ legal problem.     

In the end, a sincere and well timed apology can turn negative energy into positive energy.  It’s a lot cheaper than a lawyer and you can get on with your business.  

 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!