A growing number of smart companies now have stand-alone units to handle their litigation comms.
In the corporate world today, it's pretty evident that those who know that "no comment" is no longer the standard quote to litigious situations are more closely aligning legal counsel and communications.
DaimlerChrysler understands this necessity to integrate, not isolate, legal and PR. The automaker is one of a growing number of US corporations with dedicated litigation communication engines.
These are standing units serving as appendages to legal counsel, as opposed to PR officers dragged in on an as-needed basis.
DaimlerChrysler's unit not only participates in the screening process when hiring law firms - the automaker insists candidate firms demonstrate media savvy - but also coordinates with outside PR agencies, in this case, Levick Strategic Communications.
"The first thing that you must do is prepare," says Steven Hantler, assistant general counsel for government and regulation and head of that unit for DaimlerChrysler. "Once a lawsuit is filed, it is already highly visible, so if you are not prepared, you are already behind the eight ball."
For DaimlerChrysler, being prepared is a formal process that is managed by the dedicated unit, planning messaging and media before litigation runs the risk of ripping its reputation to shreds. The unit's work is evident in a number of lawsuits in recent years.
For instance, even before a Texas trial judge dismissed a $2 billion products liability suit and found the accusing San Antonio attorneys had falsified evidence, a DaimlerChrysler team was on a nationwide media tour, producing coverage in major trade media. Resulting stories had such headlines as "Chrysler takes fight to lawyers" (The Detroit News) and "Chrysler Group Puts Texas Lawyers on Trial" (Autoworld).
And in December 2005, when a jury ruled in favor of DaimlerChrysler in a wrongful death suit in St. Louis, not only were the media seeded with enough of its perspective to ensure balanced coverage, but the day the verdict was handed down, the automaker also announced a $1 billion investment in its Fenton, MO, assembly plant.
Even when it loses, the department is working. This past November, a jury ordered DaimlerChrysler to pay $20 million to a New York City brake repairman who lost his right lung to a cancer linked to asbestos.
The verdict, which the automaker is appealing, may have gone the wrong way, but the team concedes that coverage was balanced with testimony and medical facts.
"The biggest mistake lawyers make is to say, 'No comment,' when media make an inquiry," Hantler says. "Maybe 20 years ago it worked, but it doesn't work today. Most lawyers say [no comment] is the lowest-cost solution, but I actually think it is the highest. It can be a fatal mistake."
The need to marry legal and PR has never been stronger. According to law firm Fulbright & Jaworski's annual Litigation Trends Survey, nearly 90% of US companies are engaged in some type of litigation; the average company is contending with 37 US lawsuits.
Those suits cost, on average, $8 million a year. However, approximately 40% of US corporate attorneys are unable to indicate how much of their overall legal budget is earmarked for litigation.
Tearing down internal silos and fostering real collaboration between legal and PR is essential, says Richard Levick, president and CEO of Levick Strategic Communications.
"You need to understand what drives the suit," he says. "To do that, you need intelligence. That's more than just Internet research. You need experience, industry knowledge, and investigators."
Remember Enron? Most people are unaware that Enron actually emerged from bankruptcy with billions of dollars in assets that would have ranked it as a Fortune 200 company, says Harlan Loeb, US director of the litigation practice at Financial Dynamics.
Loeb currently serves a prominent role on the liquidation team, and for good reason.
"Asset sales and transfers of stock ownership have all the markings and smoldering embers of litigation," Loeb says. "An aggressive campaign, and education of creditors, has [helped keep] everything on track."
For instance, Enron-owned Portland General Electric (PGE) and Prisma Energy, a natural gas pipeline, had a combined value close to $6 billion. When Enron wanted to sell them off, Loeb was brought in as an integral player.
"The risk of litigation surrounding both sales was palpable, given the competing agendas the various stakeholders had," Loeb says. "We put together a variety of collaterals, and presented the economic case, the legal case, the bankruptcy case, and began campaigns on both sales of assets."
With the obstacle of litigation removed, PGE stock was recently distributed out to creditors, while Prisma was sold outright.
The firm approach
On the agency side, a significant crop of specialists has risen, such as Corallo Comstock, a DC agency launched last year by Justice Department communications veterans Barbara Comstock and Mark Corallo.
"You need to put out the right information, through the right channels, without jeopardizing your position or angering prosecutors," Corallo says. "If you don't do it the right way, regardless of the facts of the case, a prosecutor may decide to slap you with an indictment out of spite."
At larger agencies, specialized units can help clients better cope with the harsh realities of litigation.
"Companies that learn how to use the media as an alternative to litigation are just taking a page from the playbook of the Justice Department and state attorneys general," says Karen Doyne, MD of crisis and issues management at Burson-Marsteller. "[Former New York State Attorney General] Eliot Spitzer used it as a platform to get life insurance companies, the financial services industry, and many others to act. If you look back, in very few of those situations did he actually file suit."
The attorney-client privilege in PR
In 2003, US District Court Judge Lewis Kaplan in New York ruled that conversations between a PR agency and attorneys for the "target" of a grand jury investigation are protected by the attorney-client privilege, as long as they relate to the handling of the client's legal problems. Kaplan also stated that the privilege can also extend to talks between the target and the agency "for the purpose of obtaining legal services." What follows is Kaplan's five-point standard of when such communications should be considered privileged. Each point must be checked before the next point can be considered.
1 Confidential communications...
2 ... between lawyers and PR consultants...
3 ... hired by the lawyers to assist them in dealing with the media in cases
such as this...
4 ... that are made for the purpose of giving or receiving advice...
5 ... directed at handling the client's legal problems are protected by the attorney-client privilege