The most widely read magazine for Canadian lawyers
Issue link: https://digital.canadianlawyermag.com/i/50828
opinion LITIGATION BY DAVID WEINER The court of public opinion counts Managing a client's reputation during a crisis is an integral part of pre-empting or mitigating future litigation. F rom Hollinger to Enron to Tyco, media interest in corporate con- troversy has exploded in recent years. Clients have found, to their detri- ment, that public attention can be relent- less, and the consequences devastating, if they are not adequately prepared. Few circumstances can affect a com- pany's reputation like a crisis. Media swarm. Customers cancel orders. Em- ployees raise questions. Shareholders get antsy. Competitors sense opportu- nity. Governments and regulators come knocking. Interest groups smell blood. And litigation may not be far behind. An atmosphere of litigation-chill has meant that executives facing a crisis often make general counsel or outside advisers their first call. A textbook legal response might be to say little or nothing, to pre- serve a company's options. This may ul- timately afford protection in a court of law but does little to protect your client in the court of public opinion, where the reputational impact of a poorly handled crisis can be greater than that of an ad- verse court judgment. 10 RULES FOR CRISIS MANAGEMENT Despite the best planning and foresight, organizations inevita- bly find themselves in a crisis from time to time. So what's to be done? Here are 10 suggestions for managing a crisis. FIRST RESPONSE SETS THE AGENDA — A company's response in the early hours of a crisis is critical. It "frames the debate." Use media as a conduit to communicate key messages. Prepare a statement with confirmed facts, communicate what the com- pany is doing, and provide background. Avoiding comment to the media merely adds to a company's perceived guilt. Be as forthright as possible: tell what you know, when you know it, and explain who is involved and what is being done to fix the situa- tion. Be sure to correct misinformation promptly when it emerges. ESTABLISH A CRISIS TEAM — Create and train the crisis team before a crisis strikes. Establish a "situation room." During a crisis, be sure the team has access to the highest levels of management. CENTRALIZE INFORMATION FLOW — Designate a trained spokes- person to speak with the media. This limits the potential for media to "divide and conquer" by reporting contradictory and incorrect information. Ensure senior management is updated with informa- tion from a wide variety of sources (media coverage, analyst com- ments, competitive intelligence, managers' first hand reports, etc.). TAKE RESPONSIBILITY — Whether a company is the perceived victim or the cause of a crisis, the public expects it to show empa- thy for those affected. In some cases, an apology may be neces- sary. This is different from accepting blame. Taking responsibility means communicating what an organization is doing to remedy the situation. 30 M ARCH 2008 www. C ANADIAN Law ye rmag.com PLAN FOR THE WORST, HOPE FOR THE BEST — Assume the worst-case scenario. Develop contingencies for the hours and days ahead, forecast possible consequences, and determine plans of action. COMMUNICATE WITH EMPLOYEES — Be sure that employees, as front-line ambassadors, are aware of what the company is doing to deal with the situation. THIRD PARTIES — Use third parties to speak on your behalf. Third parties act as "character witnesses" and often carry more credibil- ity than the organization at the centre of a crisis. USE RESEARCH TO DETERMINE RESPONSES — Polling, market research, and focus groups provide essential insight into the magnitude of a crisis and into public attitudes about where hidden issues may lie. Monitor the internet, chat rooms, and blogs. CREATE A WEB SITE — If circumstances warrant, create a web site to give quick, up-to-the-minute information and to get the com- pany's story out. PLAN FOR RECOVERY — Once the crisis comes under control, examine the impact the incident has had on brand(s) and reputation. If the brand has taken a hit, consumers may need a reason to regain their confidence. Companies should consider a broad range of communications initiatives to restore trust and loyalty — from media relations, internal communications, and thought leadership initiatives to comprehensive corporate social- responsibility programs.