Editor’s Note: The original version of this article, titled “Twenty-First Century Document Management,” was published in the May 2018 issue of In Compliance Magazine. This updated version of the article incorporates recent regulatory developments as well as additional recommendations for developing an effective document management program.

ocuments, including electronic records, are extremely important to any manufacturer, distributor, or retailer. While employees come and go and change jobs within an organization, the design plans, engineering drawings, production procedures, safety memoranda, and marketing strategies they have created represent a historical record of the safety that a manufacturer included in the product. These documents can significantly help or hurt a manufacturer or product seller, especially in the event of product liability litigation.

Unfortunately, no one knows whether an organization’s documentation will help or hurt until a lawsuit is brought or the U.S. Consumer Product Safety Commission (CPSC) initiates an investigation and the manufacturer has to produce documents requested by the plaintiffs or the CPSC. In addition, there may be documents that could be helpful, but which were written in a way that could possibly benefit the plaintiffs. And, perhaps even more frustrating, there may also be documents reflecting safety activities that were created but then destroyed before litigation or an investigation arose.

The pervasiveness of electronic records has changed how manufacturers create, store, and destroy documents and other records. In addition, growth in the Internet and social media has created more opportunities for the dissemination of potentially harmful information to the government, and to potential plaintiffs and their attorneys. Retailers and standards groups have started demanding that manufacturers employ state-of-the-art safety processes and provide documents evidencing compliance. Product liability and product safety laws have also proliferated around the world, making it necessary for a manufacturer to keep track of and document everything that is going on with its products inside and outside the U.S.

Despite these developments, the main message is the same—a manufacturer must create documentation to confirm its efforts to make safe products and, when necessary, to fix unsafe products that have been sold. In doing so, a manufacturer should think about how it might need to tell its story to a jury, to customers, to plaintiffs’ attorneys, or to the government, and to create documents that will accurately and completely describe those efforts.

During the design, manufacturing, and marketing phases, a manufacturer’s goal is to make a product that reasonably balances the risk of injury from use of the product against the product’s functionality, utility, durability, price, and other attributes. If accidents do occur and product liability claims and litigation result, a manufacturer will hopefully have evidence that it undertook sufficient measures to make a product that is reasonably safe. Thus, a manufacturer should have created and retained documents that evidence its interest in safety and regulatory compliance, and which describe the procedures that were used to evaluate a product’s safety.

However, many lawyers feel that documents that analyze risk and describe design, production, and marketing processes can only hurt manufacturers and rarely help their client’s case. So, they may discourage manufacturers from creating or retaining such documents, especially those that deal with safety. Invariably, those lawyers view such documents as potentially harmful and difficult to explain.

Despite that, each manufacturer must decide how to balance the risk of retaining documents that hopefully will help but could, in the wrong hands, be misconstrued, taken out of context, and used against the manufacturer in a product liability lawsuit or a government investigation.

Instances where manufacturers have suffered substantial losses because of “bad documents” are well-known. For example, juries sometimes react angrily toward manufacturers that consider the value of lives during design. What juries apparently don’t like is that the documents do more than consider cost and safety, and instead associate product cost with the value of human life and the value of settling cases for presumed future incidents.

Another example is documentation of a risk assessment that shows that the manufacturer designed a product that has some safety risk and did not do anything to reduce that risk to zero. These documents need to be created and written in a way that tells a story as to why the design was safe enough and did not need to be made any safer.

The lesson that can be drawn from such cases is not that manufacturers should avoid creating or retaining documents concerning design and manufacturing processes and procedures. Rather, the lesson is that they need to train employees on how to write truthfully and carefully but defensively, as discussed in this article, and how to follow up on documents when someone raises safety concerns. Manufacturers should do this not only for litigation purposes, but also to document the reasons clearly and accurately supporting their design and manufacturing decisions. This is the proactive part of document management.

In addition to having documents that cause problems, a lack of documents can also hurt the defense of a case. For example, even if an engineer can remember doing safety testing, a jury may not believe that a manufacturer performed the tests if the manufacturer did not create or keep documents about those tests. In addition, in many cases, there may be no one available who remembers the reasoning and results of these tests. Testimony about tests that an engineer remembers conducting years ago may not sway a jury if there are no documents supporting the testimony.

Further, one of the most significant defenses against a product liability claim is that there were no similar accidents in the past involving a product or earlier versions of that product. Without good documentation supporting the lack of similar accidents, an opponent can defeat efforts to present this defense. Therefore, getting rid of documents describing prior accidents or the lack of accidents can actually be harmful to the defense.

Beyond developing and maintaining a systematic record of prior accidents or lack of accidents, documents evidencing a concern for safety and “trying to do the right thing” will go a long way toward at least defusing any thoughts by plaintiffs of seeking punitive damages. Documents proving compliance with voluntary safety standards are particularly important. And post-sale, documents evidencing efforts undertaken in a recall can be crucial in defending the adequacy of the corrective program, especially when it can be proven that the plaintiff received a recall notice before the accident.

The reality is that if your company doesn’t have any safety programs in place, has safety programs but failed to create good documents, or has thrown away the documents that were created, the plaintiff may believe that their case is much better than it really is. On the other hand, if your company has safety programs and has the documents to prove it, the plaintiff will likely obtain the documents and then will have to decide if that evidence could convince a jury that the manufacturer didn’t care about safety. As an attorney, I’d rather defend a comprehensive and documented safety program any day, even if the plaintiff could argue that the manufacturer should have done more.

The potential liability of a manufacturer or product seller for negligence after sale of a product is well-known. In addition, current U.S. regulatory and common law requirements apply to information that was obtained or should reasonably have been obtained that identify an unsafe condition. The potential liability for violations of regulatory laws is growing as more foreign governments implement consumer product safety legislation. These laws contain a duty to report to the government if certain threshold safety events occur. This enhanced focus makes it even more important for a manufacturer to gather, analyze, and document safety information received from anywhere in the world.

Anything less than a “reasonable” effort to obtain and analyze post-sale information, wherever in the world it comes from, may be considered negligent by a U.S. jury in determining whether a manufacturer should have known about the problem before an accident occurred or by a government agency in deciding whether the manufacturer should have reported the safety issue to the government.

The growth of the Internet and social media have made it even easier to find post-sale information and easier for manufacturers and retailers to receive this information from those who want to communicate with them about it. Despite the fact that many of these documents and reports will be unverified, overstated, inaccurate, or incomplete, manufacturers must decide how to follow up and when to investigate such reports to determine the facts and to minimize avoidable problems that these reports could cause.

Being aware of all information—good and bad, true and untrue, complete and incomplete—can be helpful if a company can identify the important information, adequately evaluate and document it, and take any warranted corrective actions.

Documentation created post-sale is among the most troublesome because it can almost always be used to argue that the manufacturer and retailer had knowledge of a safety risk and did nothing about it. I was recently involved in the settlement of a product liability lawsuit where the retailer admitted that it did not review online product reviews readily available on the retailer’s website. This failure to monitor these reviews was going to be used by the plaintiff to argue for punitive damages. The retailer ultimately settled the case for millions of dollars.

An effective document management program includes the development of guidelines and procedures for determining which documents to create, which words to use and not use, how to deal with safety issues, in which format documents should be retained, how long to keep documents, when to destroy documents, and how to destroy them.

The pervasiveness of electronic records as the only record type that many manufacturers now create and keep makes developing a document management system difficult. And the document management programs of many manufacturers simply address when to discard documents or delete them from the company’s database. Such a narrow focus is inadequate; a document management program should consider many other elements, and without proper handling, those elements can lead to liability.

It is helpful for each manufacturing entity to establish a document management policy and guidelines. This policy should confirm that employees are encouraged to bring to management’s attention, orally or in writing or both, all good and bad information about the design and manufacturing process of which they are aware. In other words, a company should encourage employees to reveal potentially damaging information and bring it to the attention of supervisors rather than ignoring it.

The policy should also contain guidance on the kinds of documents that employees should create and how to compose those documents so that they are truthful, accurate, and complete, and will help support a defense or are at least defensible. It should contain retention schedules for all documents, including electronic records.

Another essential part of managing a document program is educating employees about the policy and how to comply. A company’s training must clearly show that the company is interested in learning about all good and bad information concerning its products, and its documents should reflect the concern that it has for selling safe products that comply with all applicable laws, regulations, and standards.

Every manufacturer doing business in the U.S. must be acquainted with the safety and quality‑related document creation and retention requirements imposed by U.S. and international laws and regulations. In addition, a manufacturer must consider mandatory and voluntary standards or certifications in the U.S. and elsewhere. For example, a manufacturer must develop and maintain certain documents to confirm compliance with the European Union’s (EU’s) new General Product Safety Regulations (GPSR).¹ This technical documentation is a structured file that contains evidence that a product complies with EU safety and regulatory requirements and must be kept for at least 10 years after the product is placed on the market, even if the product does not have a CE mark.

The key technical documents required by GPSR are those that detail a risk analysis and risk mitigation measures. And the manufacturer of the finished product and everyone in the chain of distribution must either create the required technical documentation or verify that the manufacturer has created such documentation.

In the U.S., there are very few specific documentation requirements except where a federally mandated safety standard is involved, such as the Toy Standard. In such cases, the manufacturer should have documentation that is required under the standard. This documentation will mostly just confirm that the product complies with the technical requirements contained in the standard.

Documentary evidence of compliance with such regulations may strengthen a defendant’s case in a product liability lawsuit. You can use that evidence to confirm that a manufacturer took steps to ensure that its products were reasonably safe and complied with all applicable laws, regulations, and standards. In other words, both the legally required and voluntary documents can be used to support the argument that a manufacturer considered safety during the design of the product. However, the law is clear that compliance with laws, regulations, and standards may not be a defense.

Writing defensively does not mean that a manufacturer tries to hide bad information or evidence or shades the truth. On the contrary, a company’s policy and educational programs must stress to employees that they should raise all issues, good or bad, during the development of the product and after sale.

In fact, the documents must portray correctly and accurately a manufacturer’s rationale for designing and making its product. A record of this rationale is necessary for designing future similar products and for good historical corporate record keeping. In addition, if the content of some documents challenges or discusses safety, they must be written so that they do not create misleading impressions and allow a plaintiff to use the quotes out of context against a manufacturer in litigation.

Those employees who draft the manuals, plans, specifications, and other documents, especially those written post-sale, should avoid legal terms that describe theories that a plaintiff’s attorney may present to a jury in a product liability lawsuit. These include terms such as “defect,” “negligence,” “misrepresentation,” and “reckless.” Use of these and related legal terms by internal writers may lead a jury to decide that a company is admitting or has admitted that its product is defective or unreasonably dangerous or legally deficient in some other way.

In addition to choosing words and phrases carefully, a company must organize its flow of documents to ensure that supervisors read and analyze such information, and then respond to bad reports or criticisms written by the employees reporting to them.

Documents that describe a manufacturer’s concern for and incorporation of safety into the design of its product are of little value if they are not retained long enough to be introduced in a future lawsuit or provided to the government. In fact, if a manufacturer lacks documents, a plaintiff’s attorney might use that fact against the manufacturer by raising a rebuttable presumption that the documents were incriminating and were destroyed for that reason.

Some companies might destroy such reports shortly after a product launch because they do not reflect the final design. This would make it more difficult for a plaintiff to argue that the manufacturer should have adopted one of the rejected alternative designs. However, with no documents on which to rely, witnesses testifying on behalf of the company will have to describe from memory which alternative designs were considered and rejected, which safety tests were performed during the design of the product to select the final design, and how the company incorporated safety into the final product.

A comprehensive document retention program should contain a history of the life of a product, from creation through end of life. Having a core history, initially assembled after the development of each product or product line, will allow a manufacturer to prove that it complied with all safety and other requirements on a routine basis. The project manager could gather all documents from all sources within a company pertaining to the project and organize them into a comprehensive, coherent file that describes the history of the development of the product. Drafts and duplicates of documents should be destroyed. Documents should be organized so that an email and its response are grouped together.

Developing this product history file does not mean that potentially harmful documents, such as an internal memo that questions whether a company’s current design is reasonably safe, should be destroyed. In fact, attorneys can usually determine if documents have been destroyed and will try to argue that the manufacturer had something to hide.

Juries and judges understand that there may be internal differences of opinion during the development of a product. All a manufacturer will need to explain is how the manufacturer handled this dissenting opinion—that it was fully considered and then accepted or rejected – and the basis of the final decision. Disclosure of dissension within a company can be beneficial; it confirms that a manufacturer encourages varying opinions and does not try to hide bad or potentially damaging information. Of course, it can also be harmful if a jury believes that a rejected opinion was correct.

As mentioned above, the EU’s GPSR requires the manufacturer to keep the technical documentation for 10 years. In the U.S., there are no specific or universal guidelines on how long a company should keep such documents. A company does need to comply with applicable legal requirements and any customer requirements. And companies will have an overriding sense of how long to keep documents to support their business purposes. Otherwise, documents that are necessary to explain a product’s design should be kept if they might be needed to defend the manufacturer. A company will need to make decisions about retention time on a case-by-case basis, first considering the life expectancy of a product, applicable statutes of limitation and repose, and how long after the product’s expected life that the company might anticipate claims or lawsuits, to name a few.

A manufacturer should also consider keeping some documents forever, especially if they represent an old design. Subsequent designs and redesigns are often based on earlier designs. Products evolve over time, and therefore, a manufacturer may need the earliest product development documents to explain later designs.

As a result, if such a file were developed, a company should keep the product history file permanently in electronic form, which would allow specific files to be easily located.

In the history of product liability litigation, documents have proven both helpful and harmful to plaintiffs and defendants. Even though some documents may ultimately turn out to be harmful, a manufacturer must proactively establish a document management system that ensures compliance with legal requirements and company policy and procedures and results in the creation of a story of the development and life of a product. The system should also include procedures, education, and training that will minimize the creation of misleading and unnecessarily harmful documents.

Although this system can be difficult to organize and implement, it will clearly confirm a manufacturer’s efforts to produce a reasonably safe product and be potentially helpful in defending its conduct and its products in the future.