3/1/2000 | 11 MINUTE READ

How Moldmakers Can Manage Their Legal and Regulatory Problems

Facebook Share Icon LinkedIn Share Icon Twitter Share Icon Share by EMail icon Print Icon

Sheila Millar, a noted attorney in the moldmaking field, shares her views on the industry and its challenges.


Facebook Share Icon LinkedIn Share Icon Twitter Share Icon Share by EMail icon Print Icon

Senior Editor Sherry Baranek recently chatted with Sheila Millar, a noted attorney in the moldmaking field, who is speaking at this month's annual AMBA convention in the Bahamas. She shares her views on the industry - from a legal standpoint - including her thoughts on industry challenges in this new millennium.

1. Tell us a little about yourself and describe your experiences in the field.
I'm a partner with the law firm Keller and Heckman, LLP (Washington, D.C.), which has become known as the law firm for the plastics industry over many, many years. When I first came to the firm, I immediately began working on a lot of issues in the plastics industry, including various regulatory issues, as well as working with clients to address product liability questions and commercial questions.

2. What resources does a moldmaker have?
If you're talking about resources for legal issues, some companies don't want to spend a penny. Seriously, you're in business to make quality products, to do so at a competitive price and to maintain the integrity of your business in a manner that minimizes the potential for any sort of legal or regulatory problem. That's a tough order for even the most well-heeled of companies. But the resources you need to devote to legal and regulatory issues depend on the business you're in - and the business you want to be in over time.

The biggest challenge is to determine how to marshal your resources - to tackle those legal and regulatory problems that are most important to you and to anticipate those coming down the pike. The smaller moldmakers and molders may not have any sort of in-house counsel and may refer things out to a commercial or corporate lawyer - maybe someone who handles their contracts, leases, corporate issues or maybe some employment questions. The challenge is to find a legal advisor who is knowledgeable about the range of legal issues moldmakers and molders could face. Unfortunately, the tendency is to try and save money, to address only the immediate legal issue on the table, instead of looking more strategically at some of the broader issues. Of course, that is always a challenge because you only have so many resources to devote to these things.

One way to maximize resources is to work with various associations that will do at least part of the job of keeping you abreast of key legal and regulatory issues you need to be concerned about, but that cannot substitute for independent company action.

Let's take an example. For a lot of businesses - particularly small businesses - if they have an employee complaint they are going to deal with it at the EEOC or in court, but they won't be proactive about do-ing an employee manual or employee training, or won't write out specific job descriptions that outline the 'essential functions' of a job to minimize liability under the Americans With Disabilities Act (ADA).

If that isn't done, problems could arise. For example, if a person who qualifies under the ADA comes in and demands accommodations and you haven't gone through that process, you are in a bind because you are potentially going to have to accommodate him or her, and he or she may not in fact be qualified to do those essential functions of the job. But, you haven't protected yourself by outlining them. That's an example of a real practical, ground zero problem for companies - and not just moldmakers. Any business could face that challenge.

3. What are the biggest legal challenges facing moldmakers today?
Employment litigation is a hot and growing area, one where moldmakers could use some help. Contracts are another. Again, it's not unique to moldmakers, but some companies don't always look to contractual opportunities to put themselves on good footing with a customer. Sometimes it's because they really don't have much bargaining power or because it's again, a resource issue: they just don't think about it. They just do the job. Instead of having a written contract that spells out payment terms, like an initial payment upon ordering, another interim payment upon completion or substantial completion and the rest upon delivery, it's just not addressed.

Another emerging issue is the challenge of doing business on the Internet, also via fax. I've had several instances with clients who have faxed invoices to customers who ordered 'x' product, but they don't fax the back page where all of the fine print is, like limited warranty information and other terms and conditions of the sale and delivery of the product. Especially with the more modern and faster communication tools in existence today, you still need to have a mechanism to make sure that key terms, like legal terms, are actually delivered to the customers. If it's not sent to the customer, then the legal protections you thought you had may be in dispute. And, as companies try to move to paperless environments, the same problem exists, along with records retention issues. You must make sure that you have retained on diskette, or some appropriate format, the back pages and fine print.

There are better opportunities to address contract terms in business-to-business transactions on the Internet, like click to acknowledge mechanisms or other techniques where the user, before navigating further and placing the order, has to indicate that he or she at least knows that the terms and conditions are posted. If your website is set up like this it offers some additional protection. I think the Internet is a big opportunity and a big challenge for all companies - because when you are on the Internet, you immediately have the potential to sell globally, and that creates questions about what law applies to a transaction, which I think you need to spell out. There are ways to set up your sites that companies and clients are just beginning to think about.

Privacy and security of credit information on the Internet is a big issue that will continue to evolve during the next couple of years, although this will primarily affect companies engaged in business-to-consumer transactions. For business-to-business transactions on the Internet, new tools to verify credit and to arrange for payment are developing which will be of great interest.

Another issue of significant interest is intellectual property. The moldmaker is making a tool for a customer using its know-how and specialized expertise, but often the tool is designed to fabricate a product, which is patented to someone else. You certainly have to be careful about the handling of designs and drawings and other intellectual property of your customers, as well as looking at ways to protect your own intellectual property in this rather complex environment. It's really a fairly complex set of commercial relationships.

Product liability issues are another aspect where fortunately the moldmaker has probably relatively less exposure than the end-product manufacturer or even the molder in some cases. And you have an opportunity to greatly protect the com-pany through contractual relationships and through mechanisms to get sign-offs on the final mold design by the client. Your goal is to make a tool, which will allow for the fabrication of a part made to someone else's specifications. If you have made the tool to someone else's specifications, unless your tolerances are widely off or the materials used to make the mold were themselves defective (in which case you might have a cause of action against your supplier) or similar problems arise, you have a more limited scope of liability as a moldmaker than some of the other participants in this field.

4. How can moldmakers protect themselves?
The best way a moldmaker can protect himself is to be a top-notch moldmaker - it's going to build your business and your reputation. If you are known as a company that is committed to quality tooling and if you understand your business, run a safe operation, pay attention to the rules and regulations on the environment and other things - I think that is your first line of defense in protecting yourself. But, it means being proactive about compliance.

Also, seek some help with commercial issues. To be most effective, your advisors should understand the marketing/distribution channels for your products, relationship issues, your views of new activities like getting on the Internet, and so forth. A lot of companies are working with technical consultants that don't understand the legal issues of the Internet or with traditional commercial lawyers who don't understand the Internet or who don't really understand the complexity of relationships that are an everyday reality for the mold-maker. But only you can decide how you want to address the issues of the future, if that's part of your strategic business plan.

Another way is to be sure to understand some of the nuts and bolts of the law - what do you do when you get a lawsuit and who do you have to notify? How do you handle the paperwork? What timing issues apply? Again, I don't think moldmakers get a lot of lawsuits, fortunately, but slip-ups with your insurance company in terms of notices can lead to a denial of coverage. That can be a very expensive mistake.

5. How can moldmakers get legal assistance?
Model mold lien and mold retention laws were drafted many, many years ago by the Society of the Plastics Industry, Inc. (SPI), and I confess to having been involved in those early stages. The model laws were primarily designed for molders. For example, once the moldmaker makes the tool, they often have protection under existing lien laws to receive payment for work they have done before delivering the tool to the customer. On the other hand, the molder, because he doesn't build the mold or work on the mold, doesn't have those same rights under normal lien laws. So the model mold lien bill addressed that.

When the moldmaker finishes the mold, he sends it to the customer or to the molder at the customer's direction. So now the molder has the mold, he doesn't own it, but if the customer doesn't take it back and he is left holding the mold, he may have to store it and insure it, preserve the safety of it and can't really use it. So, the model mold retention law is designed to protect the molder again in a situation where there is equitable bargaining power between the customer and the molder.

Now I also should say that model laws can be changed by the state and haven't been adopted everywhere. It's an area where companies that are interested can and should check to see what applies where they are operating.

6. What are some of the bare essentials moldmakers need?
Being prepared and educated is the first legal line of defense for any company - understanding what the issues are, talking to colleagues in your industry and reading the press reports, so you get a sense of what the big issues are for businesses in general and for your particular industry. These are good rules of thumb, along with having educated counsel.

Unfortunately, I think sometimes people look at counsel as a necessary evil - not wanting to talk to them unless they absolutely have to, but again, you have to develop the right kind of relationship with your counsel. It has to be a trusting relationship. Your lawyer is there to help you and if you have a law firm that works with you, with the view that they want to help you, you can establish an ongoing relationship with them.

A fundamental tip for dealing with any law firm is to make sure your lawyers understand your business - your company, your industry. We have a lot of clients in the plastics industry because we fundamentally understand the plastics business. We make a great effort to learn about an industry we represent because it helps us to be better at assisting our clients and addressing their various business needs.

7. Cost involved?
You can't generalize about legal costs. There are many variables. But your relationship with your lawyer has to be one of trust if your lawyer is going to effectively represent you. That's the key.

8. Where do you see the industry headed in the future and what legal issues do you see evolving?
We've talked about employment issues, Internet issues and contract issues - another one is worker training. An un-trained workforce can result in big costs - lost time, lost production, poor quality. All of these things can lead to unhappy clients, or even defective products and lawsuits. This issue may be too big of an issue for any one company to solve.

Companies are looking for all sorts of ways to educate and train workers: scholarships, vocational training, etc. If you can't get the workers of tomorrow in the pipeline today, where is your business going to be?

Another challenge for any business, and particularly for smaller companies, is a resource challenge. You don't necessarily have the manpower to monitor things, and take the kind of proactive view and strategic approach to addressing issues before they become problems that this increasingly competitive environment may ultimately demand of you. And the way to really get a handle on it, as I said before, is to work through your various trade associations to stay abreast of happenings and then look for ways to get help when you need it. At the end of the day, our goal is to help our clients do business - manage their legal and regulatory problems, and help them respond to emerging business challenges - hopefully in a way that avoids them becoming big legal issues in the future.


Related Topics