COMMUNICATING EFFECTIVELY DURING LAWSUITS AND OTHER TIMES OF CRISIS: Restoring Faith and Avoiding a Media Circus

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1 COMMUNICATING EFFECTIVELY DURING LAWSUITS AND OTHER TIMES OF CRISIS: Restoring Faith and Avoiding a Media Circus Charles T. Huddleston, Esq. Sarina M. Russotto, Esq.

2 Top 10 Things to Do to Manage a Litigation Crisis Situation 1. Implement a strategy that emphasizes credibility, good business practices, and good will for your company. Implement and/or conduct a legal review of your preventive employment policies. For example, make sure that you have effective and publicized policies against harassment and discrimination, an open door reporting policy with alternative reporting avenues, a workplace violence policy, and safety policies and procedures, among others. 2. Identify and address vulnerable areas before a crisis strikes. Conduct an audit of your organization, which might include confidential employee interviews and on-line searches for rumors about your company. Generally, someone has information about an impending crisis. The sooner you get this information, the more likely you will prevent or significantly minimize a crisis situation. Your goal is two-fold. First, you want to uncover the perceptions held by your employees. Second, you want to ensure that your employees understand your policies, are comfortable utilizing the reporting mechanisms, and understand that they will not face retaliation for using the reporting procedures. 3. Create a Crisis Response Team. This Team should include a high ranking officer, senior management, human resources officials, public relations staff and/or independent consultants, and your legal counsel. This Team should be in place and familiar with each other in advance of a crisis. Remember that written and communications may be discoverable in a lawsuit, so consider conducting team communications in person (or via telephone). 4. Plan, Plan, Plan. Prepare a Crisis Response Plan with hypothetical crisis scenarios and processes for responding to each. Include and telephone lists to contact all essential people and key audiences. The Crisis Response Team should be familiar with these procedures and have an opportunity to practice handling the situations.

3 5. Quickly gather all the facts when a crisis is on the horizon. You must completely understand the crisis and potential risks prior to making a substantive response. 6. Designate a spokesperson. Be selective to ensure that your spokesperson is credible, confident, likeable, empathetic, comfortable on camera, skilled in responding to tough questions from the media, and able to remain calm and collected. It also is a good idea to have an equally-qualified back up, in the event the primary spokesperson is not available. Ensure that the spokespersons practice answering the tough questions, which must be anticipated. It is imperative that each spokesperson is providing a consistent and uniform message. It is well worth the money to invest in basic media training for your selected spokespersons, and for any executives who may be called upon to appear at a press conferences and/or to provide interviews to the media 7. Be prepared to deliver key messages to your key audiences. Identify each of your relevant audiences, and be prepared to address the relevant concerns of each group. Groups to remember include your employees, shareholders, clients and/or customers, vendors and suppliers, the general public, and the media. Emphasize both the human issues of the crisis, demonstrating compassion and conveying an assurance of safety, as well as the intent to return to a productive and/or safe environment as soon as possible. 8. Communicate internally to your employees and immediate stakeholders before they hear the news from an outside source. You do not want your employees and other valued stakeholders to be surprised by negative news from the media. Give them your perspective before it hits the press, and remember the importance of expressing concern for the human aspects of the crisis. If possible, it is a good idea to communicate in person.

4 9. Have ample lines of communications available (fax machines, telephone lines, lists). Not only do you want to be accessible, you also want to share information as quickly as possible. Time is not on your side, and periods of silence or delay may have negative connotations. 10. Act as your own publisher. It is a good idea to report on the situation before the media gets involved. Consider creating a web site in advance to post your company s perspective on the crisis-related issues as soon as possible.

5 Top 10 Things to Avoid When Addressing a Crisis Situation 1. DON T go it alone. Remember to integrate your human resources, financial, risk avoidance and legal strategy with your public relations strategy. 2. NEVER assume that your perception of the company is the same as your employees perception. A crisis is certain to occur if you assume that your employees are happy with their work environment. Your employees will either to praise their work environment or complain about it to friends and family. If there is a problem, you want to be the first to know about it. Do all you can to understand their perception of the company and their daily work environment. Conduct audits, and if you hear rumors, track them down to see if there is any substance to them. 3. AVOID poor internal communication systems. When you conduct your audit, it is critical that you determine the effectiveness of your communication mechanisms. If your employees are afraid or otherwise uncomfortable voicing their concerns, you have a greater chance of being hit with an unexpected crisis. Likewise, the more you communicate to all levels of employees, the more likely it is that you will be able to prevent speculation and rumors. Minimize the communication disconnects throughout the company. 4. DON T ignore non-traditional sources of information, especially the Internet. It is a good idea to monitor communications about your organization on the web. The web is a breeding ground for rumors, (often started and perpetuated by disgruntled former employees) which, if undetected for too long, may cause significant damage. This might include monitoring your employees usage. In addition to using the Internet to detect potential problems, you also should utilize your internal and external websites to your advantage by immediately posting your perspective and responses to crisis situations.

6 5. NEVER panic and never lie. Rely on your Crisis Response Team, who will be well prepared prior to any crisis arising. The well-prepared company will be able to respond in a manner that will restore the company s credibility and integrity. 6. NEVER respond with No comment. This response is certain to cause many to automatically deem you guilty. In instances where you are uncertain of the answer, respond with something such as, We currently are looking into that situation, and we will be happy to respond as soon as we have gathered all the facts. Then ask the reporter what deadline she or he is working against, and, if you can, try to call back before then with a response. If the reporter wants to interview someone, see if she/he will give you subject matters to be covered, so your interviewee can be better prepared. 7. NEVER use inflammatory language and never badmouth the media. It is difficult to recover from a negative perception. As soon as you engage in this behavior (which may be tempting at times), the media is certain to turn your negative energy into negative publicity for your company. Remember the saying, it is not good to engage in a "war of words" with folks who buy ink by the barrel or own the television cameras and microphones. 8. DON T speak off the record. There is no question about it, in times of crisis, off the record means on the record. 9. DON T immediately react with denials, blame-shifting, and a general lack of compassion for the situation. This is a classic initial response, and it has often been severely detrimental to companies and their brands. Where denials are appropriate, offset the harsh tone with a message of compassion and empathy.

7 10. NEVER, NEVER, NEVER fail to develop a Crisis Response Plan prior to a crisis arising. We cannot emphasize enough the importance of being prepared and able to swiftly respond in a crisis situation. If you have a Crisis Response Plan and a Crisis Response Team in place, you will minimize the negative effect of any crisis. In the absence of a Plan and Team, the crisis is certain to worsen.

8 Examples of Poorly Handled Crises Exxon Valdez After the oil spill disaster in Alaska, the company responded by keeping the CEO out of sight, shifting blame to the ship s pilot, failing to accept responsibility for the disaster, and failing to demonstrate any concern or compassion for the tragedy. Dow Corning In the face of media coverage about problems with its silicone breast implants, the company responded with denials and attacks on the media claiming that: the message agenda had been led for far too long by journalists, special interest groups, and medical commentators often lacking solid scientific evidence. Dow Corning eventually filed for bankruptcy. Firestone In the aftermath of the Ford Explorer tire debacle, Firestone failed to integrate a public relations strategy into its legal response. Instead of implementing a proactive approach to restore faith and credibility, which might have included a prompt apology and swift recall, Firestone responded slowly and with denial. The brand disappeared after this crisis. Coca-Cola After the European contamination scare first broke in the late 1990 s, Coke remained silent for about 2 weeks. When the company finally responded, it focused on the quality of its product and denied any fault. Coke delayed its apology until seven weeks after the first illnesses were reported. Tommy Hilfiger - In the mid 1990 s, a rumor ran rampant over the Internet that the famous clothing designer, Tommy Hilfiger, made racist comments about minorities who bought his merchandise during his appearance as a guest on a popular daytime talk show. There was no truth to the rumor whatsoever; however, the company s failure to respond swiftly caused an undetermined amount of damage. Instead of monitoring and reacting to the negative publicity, the company failed to take any action until its customers threatened to boycott the brand. Only then did the company deny the detrimental rumor.

9 Are Communications with Public Relations Consultants Privileged? Recent case law suggests that there may be protection for the communications you and/or your lawyers have with your independent public relations consultants in certain situations. Companies should remain cautious, however, as this area currently is evolving and the privilege may only apply in limited situations. The following recent cases demonstrate the narrow extension of this privilege to date. In re Grand Jury Subpoenas as Dated March 24, 2003, 265 F. Supp. 2d 321, 331 (S.D.N.Y. 2003). At least one court has held that public relations communications are protected where confidential communications are made in the context of a high-profile white collar criminal investigation and made under the following circumstances: 1. between legal counsel and public relations consultants; 2. where the public relations consultants were hired by the attorneys to assist in dealing with the media in high profile white-collar criminal cases; 3. where the communications are made for the purpose of giving legal advice; and 4. the communications are directed at handling the client s legal problems. The court noted several factors, which are critical to the extension of the attorney-client privilege. First, the court distinguished this situation from the retention of standard public relations services. The court emphasized that the attorneys retained the PR firm specifically to reduce the likelihood that prosecutors or the government would bring charges against the client. In other words, the PR services were directed to those responsible for making legal decisions about the matter, and were not directed to the public in general. The court also placed great weight on the fact that the client s law firm retained the PR firm. The court specifically held that the client would not have enjoyed any privilege for her own communications with the Firm if she had hired the Firm directly, even if her object in doing so had been purely to affect her legal situation. Id. at 331. Haugh v. Scroder Investment Management North America, Inc., 2003 WL (S.D.N.Y. 2003). Just months after deciding In re Grand Jury Subpoenas, a different federal judge within the same United States District Court declined to apply the attorney-client privilege to communications between a plaintiff, who sued for former employer for age discrimination, and her public relations consultant who was engaged by counsel to help defend the plaintiff from further attacks in the media... once she filed her lawsuit. Id. at *1. The court considered this use of the PR firm to be nothing more than standard public relations services. The court noted that the plaintiff failed to identify any nexus between the consultant s work and the attorney s role in preparing Haugh s complaint or Haugh s case for court. Id. at *3. According to this court, A media campaign is not a litigation strategy and communications made for the purposes of obtaining public relations advice, as opposed to legal advice, are not protected by the attorney-client privilege. Id.