House Counsel Plays Key Part in Crisis Planning
By John A. Reeder, Ellis Mirsky and Ronald C. Gossling
When disaster strikes, any number of things can happen: Environmental damage occurs, people suffer injuries, human life is lost. What is corporate counsel’s role? Tradition points to minimizing liabilities. It was commonly believed that the organization should say little, protect against admission of liability and withhold disclosure of damaging facts.
Today, disaster planning takes a different approach – with a primary goal of protecting the organization’s reputation and enabling disaster recovery. A response driven by liability defense considerations may not be acceptable to management. Complicating the matter, crisis management principles may conflict with the needs of defense counsel, or even breach insurance obligations to cooperate in the defense of a claim.
Behavior in a crisis defines an organization’s reputation. Organizations that are prepared to handle disaster situations respond immediately, take responsibility to mitigate adverse events and communicate openly, earn a “thumbs up” from the public. Organizations that appear to be ill-prepared for troublesome situations, argue about fault and stonewall the public, suffer a loss of reputation. Moreover, often they are poorly positioned for future litigation.
Because business is easier to conduct when an organization is well thought of, and a defense is easier to mount on a stage of public support – rather than one that is afire with public outrage – both counsel and management should take steps to assure that they are prepared for calamities.
Disaster Recovery Planning
To begin with, counsel should review disaster plans and crisis plans with the appropriate managers and executives. Counsel needs to ensure that managers have taken steps to resolve a crisis incident swiftly. Slowness in response to a disaster is ripe ground for litigation.
Counsel should assess emergency public information plans, helping to establish and test effective methods to provide straightforward information to reporters, affected communities, customers, shareholders and regulators. Withholding of critical information can result in tort liability.
Counsel should also participate in the organization’s regular practice drills and crisis-communication training sessions. The attorney can also determine, with a reasonable degree of accuracy, what will be said publicly by the client.
The organization should be seen as a partner willing to work hand-in-hand with subcontractors, community organizations and the government on disaster recovery. In the hours after a disaster, fault is not the issue. Cleaning up the mess, reducing risk and making restitution are the issues on which reporters and the public will focus.
It is not necessary to accept blame for an incident until the issue of fault has been carefully investigated. Questions about fault can be addressed in this way: “The issue of fault will be decided later by the courts. Our present attention is fully devoted to how to resolve this situation now.”
The key in taking responsibility is to take steps that are genuinely responsible and also are viewed as publicly responsible. For example, in the Tylenol incident, not only did Johnson & Johnson pull the drug from store shelves, but the company also instituted a costly policy of protective seals for the product – thereby strengthening the company’s reputation.
Communication Principles
Counsel should encourage clients to follow five basic communication principles in disaster situations: openness, accessibility, accommodation, accuracy and control.
Openness and accessibility involve laying the facts on the table. Speculation should be discouraged. Counsel should ensure that the company makes knowledgeable people accessible to the media, key customers, local communities and regulators – and makes information easy to acquire.
The behavior of two oil companies after major spills provides a telling contrast. The first company spilled thousands of barrels of oil in an environmentally sensitive area. As many as 200 reporters were on site during cleanup. Management decided to have lawyers review answers to reporters’ questions before releasing them. The company’s reputation suffered.
A second oil company made crisis teams of communicators and experts available day and night after a recent spill. Key personnel spread out through local communities to provide regular briefings. Many of these efforts were planned in advance, and were contained in the company’s crisis communication plan.
Counsel also needs to help the company accommodate the needs of reporters, regulators and legislators to be active participants in providing emergency information. For example, the nuclear power industry, having learned valuable lessons from Three Mile Island, now accommodates the “need to inform.” In the event of an incident, a joint information center is established where the utility works with state and federal agencies.
Clear channels of communication should be developed to ensure accurate communication between incident commanders – crisis managers – and personnel who deal with the public. These channels of communication should be tested at least once or twice a year in training sessions.
In the long run, the harm to an organization’s reputation may be much greater than its ultimate liability arising from a crisis incident. Crisis management relies on principles that are often at odds with traditional claims-defense strategy. Counsel should plan for the difficult choices that must be made in the event that a crisis should occur.
This article originally appeared as a special to The National Law Journal.
