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Lawsuits Dampening Innovation But Helping Safety, Survey Says

January 4, 1988

LOS ANGELES (AP) _ Fear of lawsuits might be stifling innovation, but is also making products safer, according to a survey of 101 high-level corporate executives released Monday.

The survey for Egon Zehnder International Inc. revealed mixed and sometimes contradictory feelings on the part of the executives. The results are not necessarily consistent with the views of high-level corporate executives in general because of the small size of the sample.

The survey for Egon Zehnder, a New York-based management consulting concern, was based on interviews by an independent research firm.

Sixty-two percent of the executives agreed that innovation and experimentatio n had been constrained in American industry in the last few years, and 91 percent of those cited fear of liability lawsuits as a major cause of the constraints, the survey found.

However, 66 percent of the respondents said the principal impact of product liability lawsuits ″has been to force companies to be more careful with their products, not to limit innovation.″

The American Bar Association seized on the safety finding in a response to the survey. ″The business executives confirm that the enforcement of a standard of care by the threat of litigation has improved product design and production techniques,″ Robert MacCrate, the group’s president, said in a prepared statement.

The survey also found that 64 percent of the executives felt juries were incapable of making informed decisions on complex issues, while 78 percent felt juries tended to side automatically with the plaintiff.

Asked how much impact liability suits - and the threat of such suits - had had on their own companies’ ability to compete in world markets, 1 percent said it was ″crippling,″ 5 percent listed it as a ″substantial impediment,″ 30 percent as ″slightly negative″ and 47 percent as ″no negative impact.″ The remaining 17 percent were undecided.

About 53 percent of the respondents agreed somewhat and 4 percent agreed strongly with the idea that state-of-the-art products that would help the United States regain its competitive footing are not going forwrd for fear of liability suits.

Fifty-two percent of the executives cited lawyer avarice as the primary cause of industry’s liability insurance crisis, while 47 percent cited heightened awareness by activists, the survey found.

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