Legal Crisis Strategies

Expecting the Unexpected....The Crisis Audit

Eileen O'Connor — Fri, 20 Aug 2010 13:17:16 -0600

We’ve talked before about crisis prevention in general. With any of the crises we’ve seen this summer, it would be hard to say, “This came completely out of the blue.” That’s because we all have an inkling of what could happen but few of us want to think about the worst case scenario. But without actually identifying potential crises, a company can never prevent it and will, in turn, not be prepared to deal with it effectively.

So CEOs and General Counsels need to think like their security officers and analyze the risk of a crisis by looking at the company’s vulnerability to a specific threat and identifying ways to lower that risk. Every police officer, federal agent and emergency manager knows the equation:

Risk = Threat x Vulnerability

Threats come in all forms. If you are a food processing company, it could come in the form of some health outbreak caused by a system failure or product tampering. There could be a catastrophic accident (such as we’ve seen recently in the Gulf), environmental harm, either from the accident or manufacturing processes, technological breakdowns, rogue employees (some rogue stockbrokers come to mind). The best way to prevent these potential crises is to sit down with senior management to examine the worst case scenarios, in order of likelihood, and assess the reputational, legal and economic damage each could do to the company.

Next, identify what systems are already in place to prevent these threats from occurring. Where a company can really benefit economically from a crisis audit is by helping the General Counsel see what systems, trainings, and compliance regimes are in place, inadequate, or not properly implemented. Do a cost/benefit analysis on what else could be done to reduce the threat. Sometimes it just isn’t economically feasible to “harden” every target, but keep in mind the cost of the potential legal liability if your inaction could be found “negligent.”

Third, develop a plan of action in the event that this threat becomes a reality. Make it specific, even down to potential messages that could be used in the first few hours. Identify which managers would be on the “crisis response” team and which law firms you would use to handle that particular type of crisis.

Finally, but probably most importantly, make sure these crisis audits are done under privilege, through the auspices of the General Counsel. Bring in unit managers and, ultimately, your PR team, but make sure that all communications go through the legal department.

A crisis audit, if done regularly, will also help you establish an “early warning system” and avoid the crisis before it hits.

Is Anyone Ever Really "Off-the-Record" in the Digital Age?

Eileen O'Connor — Tue, 06 Jul 2010 13:24:25 -0600

General Stanley McCrystal, Virginia Senator George Allen and Carly Fiorina, among others, have learned the hard way that in today’s 24/7 news, blog, twitter and YouTube world, nothing is “off-the-record” and everything, even the most petty remarks, are up for endless debate. Those “off-the-cuff” remarks, whether told to a reporter allegedly under an “off-the-record” ground rule or caught on video or audio can so quickly shift focus from the person’s real message to a debate over inconsequential subtext that can derail careers, candidacies and reputations.

Even actions matter. Take the pictures of Tony Hayward, BP’s battered and buffeted CEO, who had complained that he wanted his “life back” after the oil spill, and moved back to Britain at the orders of the Chairman. The very first days after his arrival he was photographed on a yacht in crystal clear waters, which did not go unnoticed at the White House, with Chief of Staff Rahm Emanuel commenting, “Well, to quote Tony Hayward, he’s got his life back, as he would say.”

Does this mean you should never engage with the media? No. With or without the mainstream media, there are more and more blogs, citizen journalists and just plain “watchers” out there. In fact, the Democratic National Committee is working on replicating that “Macaca Moment” of Senator Allen’s by organizing “The Accountable Project,” by encouraging people to go to Republican events and upload videos to show candidates engaged in gaffes, double-speak and hypocrisy.

Unfortunately, this kind of “gotcha” citizen journalism means no one is ever truly “off” the record. Which is why a company should warn key managers, the public face of the company, to guard against those embarrassing photos, quotes, and quips that can be caught on a camera-phone and uploaded instantly to Facebook, Twitter or a consumer website. Facebook and Linkedin are nice, but having lived and worked in Russia for the last 20-odd years, after the spy scandal broke last week, I immediately checked my friends and “LinkedIn” list for any of the suspects. You never know.

Crisis 101: Responding to Media Inquiries

Cecilia Showalter — Thu, 10 Jun 2010 12:26:24 -0600

No matter what your crisis is, and no matter what your media strategy may be, the best way to manage a crisis is to respond to reporters and to do so in a timely manner. It may sound obvious, but too many companies fail to do this, whether because executives have stuck their heads in the sand, don’t feel prepared to talk with the media, or simply don’t make media inquiries a priority. But ignoring the media is a huge mistake that can be easily avoided.

No “no comment,” please!

When a crisis situation breaks, it is imperative to put together, at a minimum, a statement—no matter how short—that will serve as your response to media inquiries until you are prepared to provide further information. Even if it is something as generic as, “we are taking this situation seriously and conducting a full investigation.” Anything is better than a “no comment,” which can leave the public with the impression that you or your company has something to hide.

Proactive Media Strategy

Depending on the circumstances, adopting a proactive media strategy can be the most effective way to manage a crisis situation. This requires some fact-finding ahead of time so that you can work closely with one or several reporters as events unfold. Even if there is some uncertainty surrounding the situation, building a rapport with reporters and providing them with the facts is the best way to get accurate, balanced coverage of an issue. News outlets can report the best facts you have on your side only if your provide those facts to them. Stated differently, take every opportunity to balance a bad story with all of your best facts—including the story of what you are doing to take accountability for what went wrong. This last step is the key to protecting your reputation and repairing trust among your stakeholders and customers in the aftermath of a crisis.

Rapid Response

Being prepared for the onslaught of media inquiries is a critical part of managing a crisis. We often work with our clients to set up rapid response operations, which is simply a small group of individuals tasked with receiving, organizing, and responding to media inquiries. Those in charge of responding to reporters should be one or two people who are very familiar with all of the relevant facts, statements, and/or messages (depending on your particular strategy) which should be vetted by executives and attorneys. These individuals should have experience working with the media, and should be prepared and available to return phone calls well within reporters’ deadlines.

When you are unprepared for a rush of media coverage, your side of the story becomes, “Company X was not immediately available for comment.” This is not as bad as a “no comment,” but it is a wasted opportunity to balance the story with good facts, and perhaps more importantly, a wasted opportunity to handle the negative facts. Obtaining balanced coverage requires ensuring that reporters have facts to report—whether positive or negative.

Conclusion

It is a worthwhile exercise to conduct a “fire drill” scenario to plan ahead for a negative event. Identify ahead of time who will comprise your team of inside employees and outside advisors that you will call when a crisis breaks. Make sure you plan for good communication and organization, especially when it comes to handling the media. Urge your executives to view each media inquiry as an opportunity rather than an annoyance, and you will see what the power of communication can do to shape public opinion.

Crisis 201 (Beyond the Basics): Win the Legal Battle or the Moral War?

Steve Ryan — Thu, 03 Jun 2010 13:56:12 -0600

Whenever I have been faced with counseling a CEO going before the press or Congress to answer for the worst judgments by persons in the CEO’s organization, the tension between reliance upon the regime of legal rights and the decision to accept a broader responsibility is inevitably on the agenda. This is a difficult position to navigate when simultaneously juggling legal liability, duties to shareholders, and long-term reputation concerns.

In 1974, Soviet dissident Alexander Solzhyenitsyn delivered an address at Harvard University in which he critiqued Western (read “U.S.”) society for its over-reliance on law compared with doing what is “right.” A piece of that address is well worth considering in the wake of so many recent corporate crises:

Western society has given itself the organization best suited to its purposes, based, I would say, on the letter of the law. The limits of human rights and righteousness are determined by a system of laws; such limits are very broad.

People in the West have acquired considerable skill in using, interpreting and manipulating law, even though laws tend to be too complicated for an average person to understand without the help of an expert. Any conflict is solved according to the letter of the law and this is considered to be the supreme solution. If one is right from a legal point of view, nothing more is required, nobody may mention that one could still not be entirely right, and urge self-restraint, a willingness to renounce such legal rights, sacrifice and selfless risk: it would sound simply absurd.

One almost never sees voluntary self-restraint. Everybody operates at the extreme limit of those legal frames. An oil company is legally blameless when it purchases an invention of a new type of energy in order to prevent its use. A food product manufacturer is legally blameless when he poisons his produce to make it last longer; after all, people are free not to buy it.

I have spent all my life under a communist regime and I will tell you that a society without any objective legal scale is a terrible one indeed. But a society with no other scale but the legal one is not quite worthy of man either. A society which is based on the letter of the law and never reaches any higher is taking very scarce advantage of the high level of human possibilities. The letter of the law is too cold and formal to have a beneficial influence on society. Whenever the tissue of life is woven of legalistic relations, there is an atmosphere of moral mediocrity, paralyzing man’s noblest impulses.

(Emphasis added.)

It is absolutely clear that any divergence between a company’s assertion of its legal rights, even in the most polite and appropriate way, and the public’s perception of what is ethical behavior poses the ultimate serious issue for crisis management. For example, a company that cause a crisis in which people or property are injured may take responsibility by saying that it will pay “all legitimate claims.” Immediately, the media and public will ask whether that company is relying on a litigation strategy to determine what a legitimate claim will be—certainly a legal right—or whether the company is promising to accept responsibility for damage to others from its conduct that might even be the result of its business partners’ actions and decisions? Will legitimate or even peripheral claims be paid outside of litigation?

In a legal-political-business and environmental catastrophe, can a company, as a representative of the corporate business community, claim that it can comply with ethical and moral values and set aside legal principles? A company facing a complex crisis is in the most difficult position possible to parse such distinctions. The irony such companies face is that, in order to maintain their long-term reputation in the marketplace, they must act ethically and ‘do the right thing.’ However, ‘doing the right thing,’ in some cases, may mean taking financial responsibility to the point where a company cannot survive in the long-term. Even with the best intentions, drawing the line between a legal floor and an ethical ceiling can be difficult and risky. For this reason, a company must have a clear understanding of its constituents, its risks, and must surround itself with a proven and trustworthy set of advisors. More thoughts on this next week…

Crisis 101: Leave the Finger-Pointing for the Courtroom

Cecilia Showalter — Fri, 21 May 2010 08:17:10 -0600

In the face of a recall, a disaster, or a crisis, too many attorneys counsel their clients to avoid apologizing and to avoid taking responsibility in order to minimize their legal exposure. These lawyers would likely have their clients believe that doing so would “open the floodgates of litigation,” or “provide evidence of wrongdoing that would strengthen claims.”

The truth is that if your company was involved in a large-scale crisis, it will likely face some litigation or at a minimum, a government investigation. And, there are many ways to take responsibility without stating that your company was at fault. In short, focus on solutions and leave the finger-pointing for the courtroom.

If there are a number of people and companies involved in the crisis at hand—there usually are—you may not be solely at fault, or you may not be at fault at all. Nevertheless, it’s important to let the public, your customers, and your employees know that you are stepping up to the plate. By stating that your company is, for example, “doing everything possible to rectify the situation,” or “working closely with authorities and partner companies to bring about a solution,” and “paying the costs of remediation,” you are neither accepting fault or pointing fingers. But, importantly, you are working on repairing the trust of the public, lawmakers, and your regulators.

In particular, if your company is involved in a crisis in which people are injured, it is imperative to express some regret about the events that occurred. And, it is possible to craft an apology that does not expose you to additional liability. It’s not easy, but it’s possible. (For more on apologies, see our post, The Art of the Apology).

Pause Before Hitting "Send"

Eileen O'Connor — Fri, 23 Apr 2010 18:25:37 -0600

Just about every day since the digital revolution began, plaintiffs, regulators, prosecutors and members of Congress roll out damning and spicy quotes from email exchanges between employees as the basis of their litigation, investigation, charges or public hearings. And then there are voice mails, Facebook, mySpace and Linkedin messages to consider as well as those quicky emails and texts sent from blackberries and cell phones. We all remember them…the government convictions in recent years based almost solely on email or the love notes to a fellow employee that result in the boss getting fired. What can any CEO or general counsel do to protect against these inflammatory emails, taken out of context, often making assertions and not stating facts, from becoming the basis of legal action against his or her company and employees?

One simple solution is training and educating employees on how their words in emails and any electronically sent or saved message do matter. These are not “private” messages and once on a computer, particularly a company computer, they are discoverable and usable by your adversary in any way they want, either as evidence in the legal arena or to inflame customers, shareholders, or potential jurors in the court of public opinion. Most people don’t write emails thinking they will be blown up by an adversary, scrutinized for meaning and interpreted to their best advantage. What you meant to say may not be much of a defense against what you did say in black and white in front of the jury.

While people pour over their transaction documents and briefs, rarely do they take that care over emails about those same documents—emails that can be much more telling about motivation and which can be more easily found and discoverable. Why? Because emails are electronically searchable and often sent around to a wider array of people, including non-attorneys or others outside the company,, that could amount to a waiver of privilege.

Therefore the best way to manage a crisis from a damning email is to prevent that damning email from being written in the first place. Employees need to be told, “Unless you want this email blasted on the front page of the New York Times, or blown up on a placard in front of the Senate Judiciary Committee, the Golden Rule should be : Don’t hit send.”

Mind the Gap! Repairing the Reputation of the Redskins and Your Company

Cecilia Showalter — Wed, 07 Apr 2010 11:34:33 -0600

When the news broke on April 4, 2010, that the Eagles traded quarterback Donovan McNabb to the Redskins for a second-round draft pick, many D.C. football fans let out a collective groan that could be heard from Loudoun to Landover. The general sentiment among many fans and local sports media has been, “Here we go again.” Dan Snyder, in particular, has been roundly criticized by fans and the media over several years for making splashy off-season deals that fans (including me and my poor superfan of a husband) say cost too much money, give up critical draft picks and usually result in a huge flop, often because these overpriced players are past their prime (e.g., Albert Haynesworth, Jason Taylor and Adam Archuleta). I think it is safe to encapsulate the perception of many Redskins fans on the night of April 4 as follows: “The McNabb trade is another heavy-handed and misguided decision by Dan Snyder; we are acquiring expensive veterans in the wrong areas (Larry Johnson, Willie Parker, Donovan McNabb) when we should be rebuilding our offensive line and attracting young talent. The 2010 season is already looking like a bust.”

Corporations and high-profile individuals often face the same perception disease currently ailing Dan Snyder and Redskins management. There comes a time that public perceptions become so deeply entrenched that even when the facts on the ground are good—even GREAT—it appears almost impossible to close the gap between perception and reality. It doesn’t have to be this way.

Let’s examine the facts of the McNabb deal. First, the Redskins haven’t had a quarterback as accomplished as McNabb, a six-time pro bowler, since the days of Joe Theismann, Doug Williams and Sonny Jurgensen. Second, McNabb has been playing in the NFC East and in a West Coast offense for the entirety of his 11-year career. Third, I am not going to argue that McNabb is the next John Elway—not even close—but there is a real chance that the Mike Shanahan / Donovan McNabb pairing could create something successful, even something special. Fourth, the McNabb deal does not completely foreclose the opportunity for the Redskins to make some much-needed changes to their offensive line. Finally, it is possible, even probable, that the decision-making process in Ashburn has changed. It is at least as likely as not that this was as much a Mike Shanahan / Bruce Allen decision as it was a Dan Snyder decision. Why wouldn’t a veteran coach want a shot at a veteran quarterback?

So, what do the ‘Skins, and especially Mr. Snyder, have to do to close the gap? Execute. Disprove. Earn trust. Once your personal or corporate reputation has become negative and intractable, no amount of talking, explaining, promising, marketing or manipulating the media will bridge the gap. The only way to change perception is to focus on your product. Get honest. Set realistic, achievable expectations and create real “wins” backed up by great facts. While a Super Bowl win is what D.C. fans are after, the Redskins don’t need to accomplish that to turn around public opinion—and neither does a maligned company.

Simply, the Redskins need to meet their fans’ basic expectations, which they have been failing to do over the past several seasons. They must win games that are winnable; they must not give up big leads and lose games to teams that they can beat. They must make changes to their offensive line so that their quarterback does not get beat up in every game. Drafting a left tackle, as the rumors say they will do, is a good way to meet this expectation. They must show a healthy balance between their ability to run the ball and pass the ball. They must have a better record than they did last year, which was 4 and 12 (which shouldn’t be difficult to accomplish). Even if they matched their 2008 record (8 and 8), fans will be delighted, so long as they win the games that they can and should win.

The same principles apply to any organization minding the gap. Ford Motor Company, for example, has executed a spectacular turnaround by going back to basics. Rather than laying out a glitzy plan and pumping expectations with hype and marketing buzz, Ford set realistic expectations and exceeded them. In 2006, many believed that Ford might not survive as it shut down operations across the U.S. and began restructuring. Since that time, it overhauled operations, paid off debt, and made its products competitive and relevant by focusing on fuel-efficiency, safety, and technology. By January 2009, Ford was the only U.S. car maker to refuse bailout money. Today, Ford’s decisions have been handsomely rewarded with greater market share and awards for its vehicles. These “wins,” and the drum-beating publicizing the wins, have caught the attention of customers who once looked exclusively to Japanese automakers to purchase a hybrid car. Quite a turnaround.

On the flip side, good reputations can become as deeply entrenched as bad ones ( e.g., Joe Gibbs). But that’s another post for another day. For now, we will watch, wait and mind the gap for the Redskins. We’ll check back in midseason to see how it all plays out.

Crisis Planning Begins at Home

Eileen O'Connor — Wed, 31 Mar 2010 08:37:48 -0600

The tragic and deplorable terrorist attacks in the Moscow subway should remind everyone that crisis management begins at home. Press reports quoted many panicked Muscovites lamenting that they could not locate loved ones and had little information as to whether they were dead or alive. Cell phone towers were unable to keep up with demand, as millions tried to check in with their family and friends who were among the 500,000 people traveling on the subway at that time.

Things could have been far worse if the attacks had continued, or the government had decided to order an evacuation of parts of the city. So how does one prepare for the unthinkable? You think about it by identifying the most likely terrorist or criminal threats and natural disasters and planning for them. You should also know and understand the plans of your workplace and community. You talk to family members about what to do in the event of an emergency by picking meeting locations, with one near home and one removed from home, in the event that your home is in the “hot zone.” You also develop a crisis communications plan for staying in touch if you are separated when the crisis occurs or afterward.

The potential liability already exists for companies that do not properly plan for natural or man-made disasters. For example, after 9/11, several lawsuits were filed against companies, accusing employers of negligence for not having adequate evacuation plans or informing their employees about those plans. Some suits alleged the foreseeable risk of such an attack because the World Trade Center (WTC) was at risk for fires and had been the target of terrorist attacks in the past, specifically, in 1993. The court allowed cases to go forward against the WTC defendants because it agreed with plaintiffs that these risks were reasonably foreseeable. In re September 11 Litigation, 280 F. Supp. 2d 279, 301 (SDNY 2003).

To mitigate the risk of liability from accusations of negligence, companies too must have plans, educate their employees about those plans and, most importantly, exercise those plans. The federal government has an excellent website with tools and information that can help you or your workplace formulate a plan.

The Predicate Story

Cecilia Showalter — Tue, 23 Mar 2010 12:04:49 -0600

In time of crisis it is important for companies to establish a pro-active media strategy that includes working with a reporter to get a “predicate story” written. The predicate story tells the whole story—good, bad and ugly—in one place, and serves as a base line story for all subsequent media coverage.

Why is this a good idea? First and foremost, with many issues, and especially in a crisis or litigation, you want to get out ahead of a story. You want to get the facts in the press so that someone else does not get to the public first with distorted facts. The predicate story is the most effective way to do this for several reasons.

Specifically, in a crisis, you want to get the story in and out of the media cycle as quickly and accurately as possible. A predicate story can help do this by being the definitive story on the issue. But, it can only be effective if the story covers all the facts—both good and bad.

A predicate story also allows the subject an opportunity to get messages and on-the-record comments into the story. This will ensure that the coverage of the issue is balanced with your facts.

You may also be able to negotiate an embargo with a reporter writing a predicate story. In this agreement, a reporter will agree to not publish the story until a certain date. For example, if you are about to file a complaint against a defendant, you may negotiate an exclusive story to a reporter who agrees to wait to publish the story until the date the complaint is filed. This will give the facts in the complaint maximum effect in the court of public opinion, and generally bring attention to your case.

Start by finding the right reporter to write the story. It is always good to work with a reporter that you know and trust, but any reporter who has been balanced and thoughtful in the past is a good one to approach. Be sure to provide the reporter the resources he/she needs to do his/her job, such as access to key documents and people knowledgeable about the facts. Finally, remember that a predicate story will take some time to write; therefore, you want to start early to give the reporter an opportunity to investigate the facts and to get comments from others. If a predicate story is to do its job, it will take time.

The Art of the Apology

Cecilia Showalter — Tue, 16 Mar 2010 18:11:58 -0600

For a public figure or corporation, apologizing requires more than simply saying, “I’m sorry.” An effective, sincere apology depends as much on the words you say as it does on the context: timing, meaning, setting and actions. But let’s start with the basics. What constitutes a good apology?

First, acknowledge your fault or offense, and apologize for it. This may sound obvious, but it is not. Too many public figures manage to sidestep this painful but necessary step. For all of the missteps Mark McGwire has made, he did directly apologize for using steroids saying, “It's time for me to talk about the past and to confirm what people have suspected. I used steroids during my playing career and I apologize.”

Many times, corporate executives are reticent to admit fault when things go wrong for fear of legal liability. Not acknowledging some kind of responsibility for the situation can easily endanger your customers’ long-term trust. There is always a way to craft an effective, sincere factual apology while avoiding damaging your position in litigation.

Second, offer your sincere regret for the actions or omissions and the effect they had on others, and take actions to make amends. In 2007, Jet Blue Airlines offered a public apology to its customers for a terrible week of delays and cancellations that left many of its customers stranded. In response, it issued an effective apology, which began:

Dear JetBlue Customers,

We are sorry and embarrassed. But most of all, we are deeply sorry.

Last week was the worst operational week in JetBlue’s seven year history.

Jet Blue also did one better—it created a Jet Blue Customer Bill of Rights that provides guidelines for what customers are entitled to when various types of delays and cancellations occur. Similarly, as we recounted a few weeks ago, Johnson and Johnson took responsibility for its Tylenol crisis and responded by creating tamper-proof packaging. The creation of “new facts” makes the apology more effective.

Third, don’t allow the drip, drip, drip of truth to render your apology insincere, or don’t 99 percent apologize. When former Senator John Edwards publicly apologized in 2008 for his 2006 affair with Rielle Hunter, he acknowledged that he was previously untruthful with the public about the affair.

In 2006, I made a serious error in judgment and conducted myself in a way that was disloyal to my family and to my core beliefs. I recognized my mistake and I told my wife that I had a liaison with another woman, and I asked for her forgiveness. Although I was honest in every painful detail with my family, I did not tell the public. When a supermarket tabloid told a version of the story, I used the fact that the story contained many falsities to deny it. But being 99% honest is no longer enough.

But even worse, he denied in that apology that he fathered Ms. Hunter’s baby with or without knowing the truth, saying, “I am and have been willing to take any test necessary to establish the fact that I am not the father of any baby, and I am truly hopeful that a test will be done so this fact can be definitively established.” His decision to continue denying paternity required him to make yet another public apology in January 2010, saying, “It was wrong for me ever to deny she was my daughter and hopefully one day, when she understands, she will forgive me.” His repeated denials also ensured that his credibility will forever be questioned.

Fourth, don’t wait until the “perfect time.” The right time to apologize is as soon as you realize that you or your company is responsible for an act or omission. Waiting too long can result in your audience feeling as if anything you do is “too little, too late.”

Fifth, know your audience. Even though you may be apologizing to family, friends, customers, sponsors or others, either personally or through appropriate channels, you cannot leave out the media. Ultimately, the media will transmit your message—often with editorial comments—all over the world. Let the media be part of the process, and answer their questions. They are the best way for you to get your story, your facts and your apology into every article written on your particular crisis.

The Need for Lawyers to Learn the Ground Rules of Talking to Reporters

Lanny Davis & Eileen O'Connor — Tue, 09 Mar 2010 07:52:09 -0600

Lawyers can get better access to all the facts and documentary evidence than non-lawyers because they enjoy the protection of the attorney-client privilege—i.e., they cannot be compelled to testify concerning their legal advice to their clients, or the knowledge they obtain in the course of being able to provide such advice, or the documents they review in determining those facts.

By contrast, non-lawyer advisors, even those public relations firms retained by law firms to assist in litigation, do not share this protection: their documents may be subject to a “qualified” privilege, but there may be occasions when, notwithstanding that privilege, they will be forced to disclose to the opposition their written advice and strategic documents provided to lawyers that have hired them. And in any event, they will almost never be given the protection of the attorney-client privilege to avoid testifying to conversations to which they have been privy because, as non-lawyers, they cannot claim to be rendering legal advice. Indeed, if they are present while lawyers are providing such advice to clients, they may actually create a waiver of the privilege, leading to the horrifying possibility that even the lawyers and clients may be forced to testify as to what was discussed.

Thus, lawyers need to learn how to talk to the media directly. They have access to the facts and for that reason are more credible in the eyes of many reporters. They also know the legal issues and risks involved in the litigation and won’t be as likely to make an error that could lead to a damaging public comment that prejudices the case. And most importantly, they can work with the client and other lawyers to develop a believable message, based on the facts, that can drive and command the message in the media, correct factual distortions pushed out by the other side and avoid poisoning of the jury pool.

But in order to be most effective, lawyers enjoying the benefit of the privilege must learn the basic ground rules for talking to the press. This will be a first in a series of blog posts explaining both the ground rules as well as the special vocabulary and techniques for being most effective in talking to reporters.

For now, let’s start with four voices that can be chosen and, once chosen, must be agreed to ahead of time by a reporter and/or his or her editor.

First, “on the record” means speaking with attribution, a name and identification as the lawyer in the case.

Second, “on background” must be defined ahead of time, since many people, reporters and non-reporters alike, mean different things by this expression. The best definition should be “on background—by this I mean you can use my quotation, but identify me only as a ‘spokesperson’ or ‘lawyer for’ and don’t mention my name.”

This is often confused with the third expression, “deep background,” which is why both the second and third must be defined and agreed upon by the lawyer and the reporter before proceeding. “Deep background” means “you can use my facts as long as you do not attribute them to me, or if you have to use any attribution, then you can use something anonymous like a ‘knowledgeable source’ or ‘source familiar with the situation.’ Or you can use the fact without any attribution at all and confirm the fact with others.”

Finally, there is “off the record.” Many people use that expression to mean “on background” or “on deep background.” It is highly recommended that “off the record” be followed by this statement: “You must agree that you cannot use what I say at all unless I change the ground rules and allow you to. You cannot mention the substance of what I say to anyone or that I am saying it. I am telling you this only for your own understanding and for no other purpose.”

In other words, don’t use “off the record” if you can avoid it. And if you must, use it only to explain a complicated problem that you don’t want to see in print at that moment in time.

On the other hand, we advise that even if you decide to use “off the record” and fully trust the reporter or editor who agrees to that ground rule, always be careful since many reporters, even in good faith, might unconsciously repeat the information and not even realize they are violating the ground rule. Thus, we always assume that even an “off the record” comment might be repeated or used, so we never use this expression to communicate something that is not a fact that can be documented and proven.

In subsequent postings, we will offer examples of the use—and misuse—of these different voices, as well as vocabulary that should be used and communication techniques that work best with reporters.

Recalls 101: What We Can Learn from the Tylenol Crisis

Eileen O'Connor — Tue, 02 Mar 2010 08:01:34 -0600

We’ve heard a lot about recalls in recent weeks. The most famous recall of all happened 27 years ago. In September 1982, seven people died from taking cyanide-laced Extra-Strength Tylenol, Johnson and Johnson’s best-selling product. J&J didn’t dither and immediately recalled 31 million bottles from store shelves, offering replacement products in a safer tablet form, free of charge. Two months later, the company reinstated the product with tamper-proof packaging, and a year later, it had 30 percent of the $1.2 billion analgesic market, down only 7 percent from its share before the poisoning—that market had represented 17 percent of the company’s income in 1981. (For more information, see Judith Rehak’s article “Tylenol made a hero out of Johnson and Johnson: The recall that started them all,” published in the New York Times on March 23, 2002.) And while the stock stumbled, only two months after the recall it recovered its 52-week high.

It was unprecedented. A voluntary recall? J&J was feted in the press as a hero and as “Exhibit A” on doing it right in every crisis management, product liability and PR class anyone has taken since.

It wasn’t the fact of the recall itself, but the timing. J&J acted immediately upon the first reports. And it did something proactive to prevent the same event from occurring again, even though it wasn’t the company’s fault in the first place.

This follows two major rules of crisis management that are particularly important to mitigate the risk of future lawsuits and damages.

First, telling all the bad news yourself. The drip, drip, drip of bad facts is never good. Getting out all the facts as soon as you know them is critical and adds to the company’s trustworthiness. It can also mitigate any future negligent claims because getting out the bad news means you are trying to forewarn people of the risks.

Second, creating good facts can counteract the bad. In the Tylenol case, the company quickly created “tamper-proof” packaging to prevent such incidents in the future. The fact that the company cared so much about product safety that it went the extra mile to create new safeguards also had a “halo” effect. Customers perceived this fact to mean that if the company was this serious about safety in this area, then it must have strict controls in others.

Crisis Management and President Obama's Health Care Plan

Lanny Davis & Eileen O'Connor — Mon, 22 Feb 2010 07:45:25 -0600

One of the first rules of crisis management, whether in politics or in the private sector, is to close the gap to zero between public perception and the facts.

In the corporate arena, we frequently are retained by clients who have already been the victims of misleading negative headlines and stories that are biased or tilted in the direction of critics. This is frequently the case in litigation. Plaintiffs attorneys know they must be skilled at getting into the media first, because most people perceive pure allegations in a filed complaint as “fact” if a newspaper reports them—and certainly that impression will grow if the response to the allegations in the newspaper stories is, “no comment, we are in litigation” or some vanilla comment such as “this is a baseless claim and we will prevail in the litigation” without any factual rebuttals.

Thus the gap grows between the allegations (which are not fact, but just someone’s allegations of fact) and the reality of what actually happened and why. And corporations receiving bad advice, namely just the legal perspective of “no comment, we will litigate this in court,” will find themselves with depressed share values and a potentially poisoned jury pool—in other words, little option but to “settle” the case, usually for large dollars commensurate with the number of times the lawyers convinced the client that “no comment” or vanilla rhetoric instead of facts was the better strategy.

Now let’s apply these lessons of the need to get the facts out early and often to the current Obama administration difficulties in getting comprehensive health care passed. Most people, and certainly most of the Republican Party and the media, have portrayed public opinion as being overwhelmingly against the Obama health care plan.

But the facts as demonstrated by respected public opinion polls do not support that general public perception. The latest Washington Post –ABC News poll, conducted February 4 to 8, 2010, shows the public essentially split on President Obama’s and the Democratic Congress’s proposal—46 percent for, 49 percent against—essentially a dead heat, since that is within the margin of error of the poll (+/- 3 percent). Even more fascinating are public responses when the three specific aspects of the proposal are spelled out concretely:

· Require businesses to offer insurance – 72 percent to 27 percent in favor

· Require all Americans to purchase insurance (the individual mandate) – 56 percent to 43 percent

· Require insurance companies to sell to all Americans regardless of pre-existing conditions – 80 percent to 19 percent

Note: These results prove that the American people overwhelmingly support a federal government mandate—to employers, to individuals, to insurance companies—to insure virtually all Americans. This is contrary to what most opponents of President Obama and most of the media have written and believe.

So how is it possible the Obama White House has allowed such a gap between public perception (and conventional wisdom) that the Obama health care program is so unpopular and the reality that American public opinion strongly supports the three specific and most important components of the actual program?

The answer is a failure to communicate the facts effectively to the American people by the Obama White House and the Democratic Congress. This is why the overall general question draws a virtual dead heat—whether people support the “proposed changes” of President Obama and the Democratic Congress—is so different from the results when concrete, specific, factual proposals are communicated, i.e., a federal mandate to private employers, individuals and insurance companies leading to near universal coverage.

Crisis management Rule 101: get a simple (I like the number “three”) three-point message out as to what the proposal actually is, repeat it over and over again, and set up a war room/rapid response room to challenge every distortion that appears anywhere—on cable TV, on broadcast TV, on talk radio, on the internet, every day, everywhere.

If you don’t get your message out first and repeat it over and over again—containing facts, facts, facts, and not vanilla rhetoric—then the other side will, and in crisis management, you never get a second chance to make a first impression, and unfortunately, first impressions count a lot.

The Dreaded Phone Call...

Eileen O'Connor — Tue, 16 Feb 2010 12:05:35 -0600

You are the General Counsel of a major corporation about to go to your son’s soccer game. It’s five to five and the phone rings: The New York Times is about to go with a story about your secret merger negotiations, that also involve sensitive talks with the U.S. Federal Trade Commission (FTC). Your stomach clenches. It’s a full blown crisis….and it’s bad…or is it?

Most people think a crisis is when something bad happens. But by definition it’s when something bad might happen depending on how you handle the moment.

According to Merriam Webster, the definition of crisis is a “decisive moment,” or an,

"Unstable or crucial time or state of affairs in which a decisive change is impending, especially one with a distinct possibility of a highly undesirable outcome."

So it’s not what is happening but what you do at those decisive moments that determine whether the outcome of this state of affairs will be good or bad and not necessarily the crisis itself.

And since, by definition, a crisis is a “state of affairs,” it is multidimensional. Most crisis involve the risk of financial damage, legal liability and reputational harm. Because the only way to stabilize a situation is to determine the underlying facts or factors that are causing the “unstable” moment, it is often legal training that best conducts the fact-finding process, under privilege.

For example:

Is there a misperception of the facts that is leading to false accusations?
Is that misperception politically motivated or coming from a competitor or someone with competing interests, such as another bidder for the same company?
Was something done that was not legal or not according to policy or best practices?
What can you do in this crucial moment to make the outcome one that enhances your reputation rather than harms it?

There can be lots of reasons that you or your company are under attack, which is why we believe three disciplines are called for in managing a crisis and ultimately achieving a positive outcome:

Legal
Political
Public relations experience

Many times all three disciplines are necessary. We call it fighting by land, sea and air….on all fronts at all times. You can do this quietly or not. In the example above, no comment is not an option. Is there a press strategy that can prevent the reporter from printing now, by offering an exclusive later? Are there facts in support of the merger than can be given without endangering the negotiations with the company and the FTC?

The solution here will certainly be driven by legal, political and public relations expertise.

Handling that decisive moment strategically can be the difference between having the reputation of a company that has done wrong to a company that cares about doing things right. It’s critical to ensure that policies are in place that are designed to prevent the most likely crisis from occurring and, in turn, will limit legal and reputational risk. The scenario of a possible leak must be planned for, with pre-approved statements available to deal with any eventuality and with a clear strategy for informing key stakeholders of the likely reporting.

Any company can plan for a crisis.

These decisive moments or state of affairs are not entirely unpredictable. For example, a global retailer that manufactures some of its own lines can either worry about being accused of unfair labor practices in areas of the world that are difficult to police or partner with a non-profit or advocacy group to work out a solution that involves these same groups advising the company on best practices and conducting “surprise” visits to ensure those policies are being carried out. This again calls for lawyers, business, political and PR experts who can view issues through multiple dimensions

So with the pre-approved messages from your antitrust lawyers, and the communications strategy you worked out with the GR and PR experts at your fingertips and ready to activate once you hang up, you take a deep breath. You can answer the questions, making this decisive moment a winner for the company by using the reporter’s query as an opportunity to get the facts out about just why this match makes sense from a legal, political and consumer viewpoint. And, you can still make the soccer game.