Authored by: Aliya Ramji, director of legal and business strategy for Figure 1 Inc. and 2016 recipient of ACC’s Top 10 30-Somethings Award.
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Guidance on handling negative publicity
This article was published as part of ACC’s “Ask Aliya” column for lawyers who are the first legal hire at their company and need advice from an in-house lawyer who has been there before.
In the aftermath of a PR crisis, how should a legal department be dealing with the negative publicity? Should we as a company own up to our issues or stay silent?
An organization needs to approach a PR crisis in terms of enterprise risk management. Legal risk is only one type of risk presented by a communications crisis and may not be the biggest risk that a company faces. In any reputational crisis, CEOs must weigh the outcomes of different risks. While lawyers may want the CEO to remain silent to avoid lawsuits, PR and communications teams may insist on acting immediately for the sake of transparency and to demonstrate they are accountable for their organizations. This is because reputational risk may be a bigger threat to a company’s health.
Consider the recent events with United Airlines. Videos, tweets, and social posts of a passenger being forcibly removed off a flight quickly went viral. A day later, United’s stock price plummeted by more than US$1 billion. While the passenger may have a cause of action, any legal ramifications will be dwarfed by reputational risk in the form of loss of customer and public trust.
As a lawyer, I take two lessons from this. The first is that sometimes the best legal outcome is not necessarily the best business outcome (and that’s OK.). The role of in-house counsel is very different from private practice lawyers. Our job is to provide the best legal advice that the company can use to manage its risks given the circumstances. We must consider more than the black letter law; we must understand the company's risk tolerance well enough to know the range of legal advice and options the organization can absorb in a complex set of circumstances that extend far beyond the legal sphere.
The second lesson is that it is imperative to develop a close working relationship with your PR colleagues. Share knowledge and share information. The general counsel is not the only one responsible for risk management at an organization. The PR and communications team also plays a role. If you have a corporate enterprise risk management team or a high level strategy team, ask them to establish risk tolerance principles that can guide you in the event of a crisis.
You should consider developing a crisis communications plan. You may not follow the plan exactly, but it will give you a framework to work within during a presumably stressful time. A comprehensive plan should include:
- Potential external legal counsel and crisis communications teams if necessary. Build relationships before a crisis so that you know who to call when the time arises. But remember they do not have detailed understanding of your company. You, the general counsel, will be best positioned to understand the company’s risk tolerance.
- Guidelines for completing a thorough investigation so that public statements are not made prematurely.
- Guidelines on developing a communication strategy with input from legal, PR and communications, and any business divisions that may be involved. The guidelines should include designating a spokesperson and developing a Q&A with respect to the issues.
- Regulators that must be notified and whether it is necessary to disclose any material information. Make sure you always comply with the manner in which you may have to disclose.