A lack of regulation is contributing to a crisis that will ultimately spill over into the directors and officer liability world–global warming, predicts a leading plaintiff attorney.
Mark Lebovitch, a plaintiffs' lawyer for Bernstein Litowitz Berger & Grossmann LLP in New York, made that connection during a panel discussion here during the international conference of the Professional Liability Underwriting Society.
Kicking off that discussion was Richard Bortnick, a coverage attorney for Cozen O'Connor in West Conshohocken, Pa., who was introduced as an expert in climate legal issues. Last year, he said, 76 percent of companies made no climate change disclosures at all in their annual 10-K filings with the SEC, because there have not been laws on the books requiring them to.
He presented a list of proposed bills and regulations that will impose such disclosure requirements in the future. Once disclosures start, lawsuits will follow alleging bad or incomplete disclosures, he warned.
Ric Marshall, chief analyst for The Corporate Library, a Portland, Me., firm that analyzes corporate governance practices, predicted that as soon as standards are put in place, "a bit of a Black Swan" will emerge.
"One day it's not an issue, the next day it [will be] an issue for everyone," he said, noting that disclosures won't just impact corporations involved in transportation, utilities, and oil and gas industries, but will affect companies that invest in greenhouse-gas-producing firms.
Mr. Lebovitch agreed that environmental disclosure cases "will come to the forefront" in the future, adding that "it wouldn't be a bad thing if there was enough liability to create incentives for companies to do…things that are environmentally friendly." He suggested that lawsuits can "provide a service" if threats of liability put an end to what he called "efficient breaches" of polluters' environmental responsibilities.
"They know exactly what it would take to cure their problems in their factories," but because there are caps on their liabilities, they won't spend millions to do so, he said. "They're able to make more money by sticking with completely outdated technologies… because they're not going to be punished for ignoring their responsibilities."
He added that "part of that problem is the insurers continue to pay the defendants' legal fees," adding that "I think…there are ways [for insurers] to keep the litigation under control and do a good thing for the world."
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