Minimizing the damage from lawsuits

All the world's a jury.

All the world's a jury.

Lawsuits can wreak havoc on a company's share value, reputation, and even business model. No wonder Wendy's earnings took nearly a 3% 1Q hit compared to last year, partly based on the media circus generated by a fraudulent claim that the fast-food giant served up a bowl of chili with a little something extra - a human finger.

The threat of a lawsuit and the related media damage can present a no-win situation for companies: either settle a false claim to end the bad publicity or fight on the facts but get tarnished in public anyway. Often the damage to a company's reputation and sales exceeds the legal risk it wants to avoid. Wendy's largely recovered its reputation, given the swift arrest of the claimant, but the fast-food finger fiasco raises the question: How should companies handle lawsuits and the related media frenzy when the case is not so open and shut?

Lawsuits are no longer tried exclusively in a courtroom. They also are tried in the court of public opinion. The trial bar targets customers, shareholders, and potential jurors who sit in judgment. So PR pros must work seamlessly with legal counsel to adapt to today's litigious environment and be ready to communicate within it.

Plaintiffs' attorneys regularly attempt to shape the court of public opinion so that business defendants will seek to settle lawsuits for a premium, rather than risk further damage to their reputation and/or financial standing. For those cases that don't get settled, the news media help shape the mindset of the jury pool such that, when lawyers make their case in court, juries nod their heads in recognition of what they heard during the media campaign.

So how can PR pros protect their clients? By forming an effective partnership with the litigation manager.

Each must know the others' goals, risk tolerance, and constraints to optimize the trial and PR results for their companies or clients. PR people should understand that more, rather than less, public comment might adversely affect a judge's view. Lawyers should understand that "no comment" could translate to "guilty" in the public's (and a jury's) view.

Consult and retain litigation communications specialists as appropriate. You might need to look to outside consultants to augment activities. Litigation communications is an evolving field, and many PR shops don't have that specialized expertise internally.

Research what is and what is not "discoverable." Under certain conditions, courts have extended the attorney-client privilege and link product protection to the work of litigation communications specialists. Legal and PR counsel should research the precedents to ensure that communications activities remain protected from disclosure.

It begins by understanding the media dynamics surrounding your case:

  • Victims make good stories;

  • Corporations rarely appear sympathetic, especially when someone has been harmed (irrespective of fault);

  • Many consumer advocates are fully briefed by the trial bar and excel at media relations;

  • Reporters often have stories nearly finalized before calling a defendant for comment.

    Then you need to develop a case-specific media plan:

  • Establish trusted relationships with the media covering your industry. Be a consistently credible resource;

  • Develop and test key messages that resonate with the public;

  • Create media-friendly materials that serve to reinforce those messages;

  • Identify compelling spokespeople and media train them;

  • Brief media before, during, and after a trial to ensure that reporters don't cover a case after only hearing from the other side.

    Ultimately, PR pros and litigation managers must work together as a unit. Their collective goal should be to expand the printed inches and broadcast seconds devoted to their messages to increase the balance in media coverage.

    Working together, each can help the other anticipate and shape the trajectory of emerging issues or facts that otherwise might be overwhelmed by the confluence of inflammatory coverage, regulatory agency subpoenas, share-value loss, and declines in corporate and product reputation. Such a perfect storm will swamp any company that does not see it coming.

    Plan for it now because, as the old adage goes, when you hear the thunder, it's too late to build the ark.

  • Steven Hantler is assistant general counsel for government and regulation at DaimlerChrsyler. He also chairs the American Justice Partnership, an advocate for state-level legal reforms.

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