Why Every Employee Should Understand Risk

To minimize risk and protect intellectual property at the toy company JAKKS Pacific, Michael Dwyer places a major emphasis on education and awareness

In a patently litigious business environment, companies often spend a great deal of time and money prosecuting or defending themselves against lawsuits—frivolous or otherwise. But imagine for a moment how much of that litigation could be prevented in the first place if only the company’s businesspeople had a greater awareness of risks confronting them. Additionally, what if those same employees understood some of the ins and outs of intellectual property (IP) rights to such a degree that infringement could be prevented nearly altogether?

Michael Dwyer, JAKKS Pacific

These are the topics that Michael Dwyer, senior vice president of legal at the toy company JAKKS Pacific, has made it his mission to address. Thanks to Dwyer and his team, employees in every department and at every level at JAKKS—from vice presidents to mail room clerks—bring an awareness of legal risk and IP protection to the work they do. Dwyer says that awareness helps eliminate mistakes that an uneducated workforce might not be aware of.

“As in-house counsel, we’re charged with understanding the nature of the legal risks applicable to our business,” Dwyer says. “How could we expect our businesspeople to minimize legal risk if they don’t know what those risks are? That’s one of our most vital jobs as in-house counsel—education.”

Prevention is the best legal defense

Part of Dwyer’s decision to leave law firm life and go in-house for his career sprang from his frustration with the hourly billing model at firms, which he came to believe often created a disincentive for preventing problems. “Prevention doesn’t pay with the hourly billing model because if you prevent a problem, then your work disappears,” Dwyer says. “Being in-house for nearly thirty years, it better fits both my personality and my paradigm of striving to anticipate and prevent problems.”

Dwyer says that in-house legal teams don’t have any incentive to prolong work, but the way some may go about trying to minimize risk and protect IP can be ineffective. Some may give employees a list of rules and rigid processes to follow, which employees may not understand or may seek to circumvent because they are viewed as unnecessarily inhibiting. Dwyer believes it’s far more fruitful to give employees a real understanding of why these rules and processes are in place.

“By giving businesspeople more knowledge, they are able to better operate creatively within parameters that minimize legal risk while maximizing IP protections,” he says. “We try to get our people to understand not just the what, but also the why.”

Use every opportunity to teach & inform

And at JAKKS, it’s not about simply placing an educational manual on people’s desks and asking them to study it. Dwyer says that every meeting, every conversation, and every call is a potential teaching moment. Additionally, legal holds formal, hour-long training sessions.

Sessions have taken place on topics such as A Lawyer’s 10 Tips on How to Make a Good Sale; IP Fundamentals; Packaging Guidelines; and—probably the most attention-calling—How to Kill Your Career with a Mouse Click, which was filled with garish examples of what can happen when someone doesn’t keep in mind that any email sent can be subject to discovery in a trial. Everyone in the company is invited to the sessions. Attendance is voluntary, but there are few empty seats, Dwyer says, as businesspeople have come to understand how vital this education is to the bottom-line.

“The business folk absolutely love it,” Dwyer says. “To the extent that we give the information that helps them do their job better, makes them look better, and helps them make or save money, they are thrilled.”

Education leads to real cost savings

The results of the focus on education have been tangible, Dwyer says. The entire workforce has come to serve as the eyes and ears of the legal team. Employees have alerted legal to trademark infringements on numerous occasions. With their newfound legal consciousness, employees have also let legal know about risks that legal might not have otherwise known. That all amounts to what Dwyer says has been a significant reduction in the time the $700 million company’s lawyers spend in court.

“Currently, we only have three pending lawsuits,” Dwyer says. “Considering that we make millions of consumer products that involve children, I think that’s impressive. It’s a testament to our quality standards, as well as our trained employees who emphasize prevention of problems at every step of the process.”

Dwyer hopes that what he’s seen work at JAKKS in shifting effort toward prevention can take hold across industries, leading to a reduction in costly litigation that he finds, ultimately, unnecessary.

“Litigation is a tool. It shouldn’t be an end to itself,” Dwyer explains. “If we all approached it that way, then we would be eminently better off. My dream is that one day crisis prevention will eclipse crisis response.”

Photo: Lisa Tanner