Counsel to Counsel - November 2008 - (Page 7) oGILVy rENAuLT LLP Avoiding a Product recall Nothing can damage a company’s reputation faster than a product recall. However, major consumer recalls, properly managed, may be contained or even averted. situation implementation steps • Review design and testing procedures. • Check materials quality standards by market. • Audit third-party suppliers and manufacturers regularly. • Initiate internal compliance training. • Establish a recall committee and handbook. • Conduct a post-mortem review of the recall. For a recall to occur, something has obviously gone wrong. Inside counsel must institute a comprehensive program that regularly monitors the entire product life cycle, from design and safety testing to third-party suppliers and manufacturers. Further, inside counsel should develop an internal recall response program. challenge in-house counsel approach sufficient time for reflection, and be firm about the importance of a thorough post-mortem. Include the requirement in your handbook. Exercise constant vigilance. To ensure product safety, make sure comprehensive product-testing and design-assessment processes are in place adopted and up to date. Review product safety standards such as tolerances, paints and packaging to be sure the product is always in compliance. If the product is sold in markets with differing safety standards, be sure it complies with the most rigorous standard. You don’t want one market getting a product that is less safe, even if a lower product standard would still meet local requirements. Be sure contracts with third-party processors or manufacturers incorporate the necessary quality controls, material standards and audit processes. Include the right to inspect a supplier’s facility without notice, and make sure the inspections actually take place. Some companies don’t follow up and end up effectively forgoing a measure of due diligence that might have avoided a problem. Be proactive and implement internal regulatory and compliance training. You may have a terrific compliance policy, but do employees really understand it? Make sure product development, marketing, senior management and key employees are aware not only of the rules you face, but are knowledgeable enough to follow them. Establish a recall team and develop a response handbook. The team should include legal, senior management, product design and testing, and marketing and communications. Consider conducting an unannounced mock recall to test your response systems and keep the handbook up to date. Should a recall occur, the information will spread rapidly, especially through social media such as YouTube. Announcing the measure may be public relations’ responsibility, but inside counsel must make sure the information is accurate. Assess how the issue came up, the questions that could arise and the information that needs to be released to minimize the possible harm. Lead a post-mortem review to determine what didn’t work or needs to be improved. This step can be difficult, especially if the recall is drawn out, because employees want to get back to their daily regimen. Provide With a system in place to prevent or catch an in-house or third-party supplier oversight or error, the chances of a product recall can be minimized. And if a recall does occur, the chances of a costly settlement or round of litigation will be reduced significantly as well. measuring success future issues to consider In Canada, draft legislation was introduced for a new Canada Consumer Product Safety Act. If passed, it will subject hundreds of thousands of consumer products to direct government regulation for the first time and reach beyond manufacturers and importers to sellers, testers, packagers and advertisers. Senior Partner Penny S. Bonner chairs Ogilvy Renault’s Recall and Crisis Management team. She can be reached at pbonner@ogilvyrenault.com. Partner Martha A. Healey has extensive experience with product recalls in a variety of industries. She can be reached at mhealey@ogilvyrenault.com. www.martindale.com/c2c November 2008 best practices 07 http://www.martindale.com/c2c
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