NEW YORK: The four-year legal case against Richard Grasso, former CEO of the New York Stock Exchange, came to a close July 1 when a New York State appellate court decided that he could keep the entirety of the $139.5 million retirement package he was given when he was fired in 2003.
Grasso enlisted Eric Starkman, president of Starkman & Associates and a former financial journalist, as his PR representation in the media frenzy that followed his exit.
In his first in-depth interview since the decision, Grasso, along with Starkman, spoke with PRWeek about PR's role in the case.
PRWeek: The lawsuit was filed in May 2004. You sought communications help because there were a lot of articles being written without you telling your side. Can you go into more detail about that decision?
Richard Grasso: When the controversy arose in late August 2003, I was still at the [NYSE] until [mid-September]. On the 17th, I was fired. Between the initial disclosure of my new contract and my firing by the board, the Exchange's communications division was effectively representing me.
Once I was no longer employed and stories between September 2003 and May 2004 were running almost daily in different publications, it was clear to me that I did need a top-flight communications professional. [I sought] someone with expertise in the space, specifically in financial services, but [also] on a targeted level, an understanding of the marketplace and the exchanges would be useful to have, in addition to that broad-based expertise. Eric's name came right up to the top of that list.
PRWeek: From the point of the firing to the time the suit was filed, how would you describe media coverage?
Grasso: You have to step back and realize that when you're in a position that I was at the [NYSE], you get a lot of great... and not-so-great articles written. The important thing is to have a balanced approach to how you¹re being covered.
I don't think I was ever as terrific as the great articles [had] suggested. And therefore, when the negatives started to flow, I equally believed I [was not as] bad as the negatives suggested.
What you really need is a communications expert – someone who has been in the arena, who can do the translations, who understands the nuances of the journalistic coverage. That's where Eric came in.
Eric Starkman: I think the media coverage overall was recklessly irresponsible. The facts of the case never warranted the [lawsuit] in the first place, but [then-New York attorney general Eliot Spitzer] and his people did a very good job of spinning stories and these stories were very damaging.
PRWeek: One of the first communications moves was to publish an Op-Ed in The Wall Street Journal.
Grasso: It was a collaborative effort between Eric; the law firm representing me, Williams & Connolly; and myself... The message was a very simple one: I was firmly of the belief that my vindication would come in the courtroom when all the facts were laid out objectively for an unbiased audience to evaluate, which ultimately proved to be correct.
Even though the law firm is going to represent you in the venue of adjudication, the communications pro that I chose was really going to quarterback the message of whatever I did with media in response.
Starkman: Every major business outlet wanted to speak to Dick, and we decided as a team that there was no point in making him available. The bias and the support of Mr. Spitzer were so overwhelming. Our logic with the Op-Ed was we wanted Dick's message to be delivered in his own words and in his own way.
We negotiated with the Journal that we would do the Op-Ed but there were certain conditions: that they wouldn't share it with their own newsroom. They agreed. The next day's stories were all based on the Op-Ed, but people who really cared would just go to the Op-Ed.
PRWeek: How effective do you think this was?
Grasso: It was extremely effective in communicating without any ambiguity that this was not going to be a lawsuit that I was prepared to settle. The Journal, to its credit, allowed my piece to run as the collaborators wrote it... My belief from the start, if you read the few times I was interviewed in the four-year period, was if I were to settle, it would be an admission that I did something wrong. I hadn't and therefore settlement was not an option.
PRWeek: What were some other PR services Starkman provided?
Grasso: Eric and I spoke multiple times each day for the better part of a year and a half. His team at Starkman & Associates covered the landscape of media through their use of electronic monitoring. I knew every morning exactly what was being said about me, where it was being said, and he didn't just give me an abridged version of stories appearing in the US and around the world. He gave me a strategic understanding of why, for the most part, we weren't going to respond. And if we were going to respond, how we would. He was more than just an aggregator of news services.
Starkman: A lot of what I did was behind the scenes with reporters. As a courtesy, every major news outlet made their cases about why they should get an interview with Dick Grasso. I heard them out, set them straight about where they were going wrong, but [at] the end of the day, it didn't make any sense to grant on-the-record interviews.
PRWeek: What effect did PR have in the lawsuit and in the outcome?
Grasso: Given the environment that my lawsuit was wrapped in - we were in the middle of the period of Adelphia, Enron, Tyco - I got swept up in that current. It's very easy for me, as a principal, to believe if you can sit down with a reporter, you're going to change someone's perspective. Eric was [the] best objective source to remind me that you couldn't do that. It was a very difficult period. [And] the litigation wasn't really going to begin for another year and half.
PRWeek: The working relationship ended in 2005. Why? Have you had any PR representation since?
Grasso: Beginning in June 2005, we were getting to the phase of the litigation where the lawyers felt it essential to go on radio silence. If I were today [to] need a communications adviser, there's only one person I would ever think of representing me, Eric.
At this point, I'm back to being a private citizen.
In the period that Eric and I were together, my legal adversary was an advocate for either going to trial and winning or forcing a settlement.
There's no malice. We chose not to respond. I had the good judgment of Eric Starkman saying there's no way in the current environment that you're going to effectively counterpunch. There [was] no need to try and parry in the press. As much as I value the media, you're not going to be tried in the court of public opinion. You're going to be tried in the courtroom. That's when you have to listen to the lawyers who say it's time to go radio silent.
Starkman: Had Dick given media interviews, the Op-Ed wouldn't have had the same value or impact. That was the first public comment that he made since Mr. Spitzer brought the charges. If he had given interviews and all his positions were known, the impact would have been severely diminished and the Journal may not have even wanted it.
PRWeek: What is the role of PR in lawsuits? What are your tips or advice?
Starkman: Every lawsuit is different. If a US attorney or an Attorney General is bringing charges, I would not try to fight those charges on the day they are announced. I would hold [off] until one sees how things are playing out.
Grasso: From the client standpoint, in the issues that were embedded in my litigation, the beauty of a top-flight professional communications strategist is that he's a partner to the process. He doesn't practice law and the lawyers don't practice communications. They compliment and work with each other. And collectively, the two disciplines are responsible for managing the client's best interests.
PRWeek: What's next now for the both of you?
Grasso: I'm not going to make any decisions until after Labor Day.
Starkman: We do a lot of crisis work here. We've worked in a lot of litigation cases and we will continue to do so.