In 1999, two teenagers broke into a Wisconsin warehouse that stored paper. While there, they unintentionally set the 105,000 square-foot building on fire. The flames spread quickly through the paper and quickly engulfed the structure. It was a total loss.

Then came the lawsuits. The building owners were accused of failing to properly protect the contents of their warehouse.

Such problems can happen to any warehouse, especially those that operate as third-party providers. While laws vary from state to state, the legal doctrine of "reasonable care" is generally used to ascertain if a warehouse provider has met an anticipated level of safety for property and workers.

"A warehouse is not liable for loss unless they fail to meet the obligation of 'reasonable care,'" says Jon Masini. He and fellow attorney, Kevin Phillips, spoke at The International Warehouse Logistics Association convention. Both are from the Chicago law firm of Daar, Fisher, Kanaris & Vanek, which defended the Wisconsin warehouse in that lawsuit.

Masini says the best way to determine reasonable care is to benchmark how similarly situated facilities store similar products under similar conditions. Operators should consider a number of factors when making their comparisons.

First, the kind of product being warehoused has to be considered. Is it a valuable item prone to theft? Is the warehouse located in an area where there is a high rate of crime? Have break-ins occurred before at the facility or nearby warehouses?

"If you answer yes to any of these, then you may be expected to add some security to your warehouse," says Masini.

Also considered is the response to past security issues. A failure to respond or correct security problems promptly increases liability. Develop a security plan that outlines what will be done and who will do it in case of a breech. Make sure that good records are kept of security inspections, incident reports, and all actions taken.

Communications is also a key. Warehouse operators should continuously keep clients informed of the security plan and any security incidents that may occur. Also, make sure that all safeguarding provisions outlined within client contracts are met to the letter and beyond.