MANAGING REPUTATIONAL RISKS IN LITIGATION
CD: When considering litigation, do companies often fail to factor in its potential impact on the reputation of the business? Do you believe companies should be as concerned about their reputation as they are about the legal and commercial impact of litigation?
Gemmill: Increasingly, litigation is creating a new kind of enterprise risk as legal, reputation and business threats merge rather than remaining siloed as usual. This is especially true in light of the coronavirus (COVID-19) crisis, and it is crucial that these elevated risks and liabilities be viewed and managed holistically. Underestimating the risk litigation may present – both operationally and from a communications and engagement perspective – holds the potential to damage corporate trust and reputation significantly. Too often, companies still think in terms of siloes within their business and believe the impact of legal matters will stay contained to that specific area. Unfortunately, legal, reputation and every other aspect of business are so intertwined today that the risk of overlooking the potential impact of litigation on reputation is far too great to ignore.
CD: What specific kinds of issues surrounding litigation might harm a company’s reputation?
Loeb: No one-size-fits-all approach applies to litigation communications. Companies should calibrate their communications strategies – proactive versus reactive measures – based on the type of legal issue involved. For instance, defending against a lawsuit following the death of an employee from COVID-19 requires a different approach than suing to fight for the survival of the business or to protect one’s intellectual property (IP). Three general issues arise consistently that could harm a company’s reputation in litigation. First, companies should not let the fog of litigation distract from its mission and values. These should be clear and should remain at the forefront of all communications. Second, communications efforts should always have the legal team’s approval. Litigation communications should always support the legal strategy and never complicate it. Finally, companies should never assume that not commenting about a lawsuit protects the company. Legal liabilities should be balanced with the need to communicate effectively and regularly about an issue to manage reputation risk. It is vital to recognise that lasting, business-impacting perceptions may develop and solidify much more rapidly in the ‘court of public opinion’ than through the often-lengthy legal process.
Jul-Sep 2020 issue
Edelman