Say You’re Sorry

In some lawsuits, falling on your sword may be smarter than wielding it.

On the eve of a high-profile trial last winter involving Ford Motor Co., Bridgestone/ Firestone Inc., and a woman paralyzed in an accident involving a Ford Explorer and defective Firestone tires, the case was abruptly settled. The terms of the settlement were not disclosed, except for one crucial element. On January 7, Ford and Firestone officials visited Donna Bailey in her Houston hospital room and gave her the one thing she demanded before she would settle out of court: a videotaped apology, which was subsequently broadcast on national television.

The apology was highly unusual for Ford, if not for Firestone, a subsidiary of Japanese tire maker Bridgestone. Unlike their counterparts in Japan, U.S. companies are loath to extend such gestures in liability cases. Part of the reason is cultural. “In Japan, there’s a tradition of apologizing,” says Marilynn Rosenthal, who has authored or edited books that deal with medical malpractice issues, and is director of the University of Michigan Forum on Health Policy. “But in America we have a tradition of not wanting to get knocked down.”

Another reason U.S. companies look askance at such acts of contrition has to do with the prevailing legal system. Simply put, they fear that apologizing for negligence amounts to an admission of guilt, opening the legal floodgates to copycat suits.

That fear is not entirely unjustified. Most states allow apologies to be entered as evidence if they’ve been offered outside of settlement negotiations. But those that are negotiated are not admissible as evidence of liability in subsequent court cases. Meanwhile, Massachusetts and California have created laws that protect “benevolent gestures,” such as expressions of remorse or regret, from use as evidence of liability in both current and subsequent cases. Other states are considering adopting similar laws.

As a result, attorneys who specialize in this area say companies are starting to rethink their approach to apologizing in liability cases (although none of the companies contacted by CFO would admit to doing so). But lawyers contend that an increasing number of corporate clients are starting to conclude, at least in some cases, that apologies can be an effective way to settle or mitigate the impact of negligence lawsuits and potentially staggering judgments.

BROKEN BONDS

Obviously, a company should vigorously defend any case in which it bears no responsibility. Often, determining who is responsible can take months, as it did with the Firestone-Ford case. But once negligence has been established, a speedy apology can be effective in reducing settlement amounts, say experts. This is especially true in cases where there is a preestablished bond between the plaintiffs and defendants, as in employment discrimination or malpractice situations. When harm occurs in these cases, there is a sense that a bond has been broken, so court awards based on intangible losses such as pain and suffering can run very high, says Daniel Shuman, an attorney and a professor at the Dedman School of Law at Southern Methodist University. And Shuman insists that apologies go a long way toward restoring that lost sense of trust.

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