HK finds litigation battles can create drop in sales

NEW YORK: American companies face more than a legal bill if they get involved in litigation without communication - risk losing 50% of their customers.

NEW YORK: American companies face more than a legal bill if they get involved in litigation without communication - risk losing 50% of their customers.

That is the bottom line from a survey commissioned by Hill & Knowlton.

The survey - conducted over the last month by Opinion Research Corporation - found that the public mistrusts companies, a situation exacerbated by failure to communicate during a trial.

A total of 2606 interviews found that 62% believe businesses do everything to make a profit regardless of the public's needs, while 48% said they would be less likely to buy a company's products if they are involved in a major lawsuit. In addition, 62% of interviewees thought a 'no comment' statement meant the company was 'covering up wrongdoing'.

'This is further evidence that lawsuits are not simply about the court room, they are about stock price and sales as well,' said Mike Buckley, senior managing director at H&K.

Buckley feels the negative effects of litigation could be countered with good PR. He cited America's current number one trial, Microsoft versus Uncle Sam.

'Microsoft communicated very aggressively early on. It might not have won them favor with the Government but it worked with the public.'

He also noted the case of Republic Industries, which was sued by Toyota.

Republic retained 23 state attorney generals who attended a press conference where they told journalists Toyota had no case and Toyota settled two days later.

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