Craig Badings, Partner at SenateSHJ, emphasises the importance of balancing legal and communication advice with the rest of the business during times of crisis. He will delve further into this topic at the upcoming In-House Counsel Conference on Wednesday 3 March 2021.
Someone once said: “When you face a crisis which threatens your client’s business you should call the crisis manager first and think about legal issues later. Do it the other way around and your client might not survive to utilise your keen legal analysis.”
Advice from a crisis communications practitioner? No. These are the words of lawyer.
From my 30+ years of dealing with crises I’ve learnt a few things. And one remains consistent – no crisis is ever solely about legal matters. In fact, treating it purely from a legal perspective can inflict reputation damage from which the company may never recover.
Crises can have a significant financial cost on a business. It can also have significant negative impact on employee morale, the personal health of those involved and the tenure of senior management and the board.
Last year, SenateSHJ partnered with a Master of Data Science Student at UTS to research ASX-listed companies which had experienced a crisis over the past 10 years. The findings were eye opening. The hit on market capitalisation ranged from $12m to $6.4bn over the period of the crisis. There was, on average, an earnings per share fall of 30 per cent and in the case of two of the companies, Ardent Leisure and AMP, media sentiment had yet to turn positive at the time of the research.
Share prices took between eight months to a year to recover and in some instances have yet to recover to pre-crisis levels.
So, what is the best approach to a crisis and how does one manage the conflicting advice of crisis communication consultants and lawyers?
We were fortunate to be invited by crisis management author and lecturer Dr Tony Jaques to explore this topic in his new book: Crisis Counsel: Navigating Legal and Communication Conflict (Rothstein Publishing 2020).
We interviewed lawyers from the UK, US, Canada, Australia, and New Zealand. Our aim was to find out what lawyers think about their role in a crisis and the professional communicators with whom they work.
Before going into the research here are the five most common aspects most prone to disagreement. From experience, these are at the heart of most of the conflicting advice between lawyers and communicators:
- The clash between liability and responsibility – when the organisation needs to step forward, even when it might not be clear who was responsible for the crisis.
- Why and how to apologise – to sincerely admit fault and avoid legalistic non-apologies which may be worse than no apology at all.
- Product crises – assessing public risk from a faulty product against the cost of a recall.
- Defending patents and trademarks – when over-zealous litigation might look like bullying.
- Marathon legal proceedings – when prolonged pursuit of some legal principle puts reputation at risk.
The lawyers we interviewed for Dr Jacques’ book said although the relationship with communicators is improving, conflict between legal and communication advice is still very real. They also expressed concern about the lack of legal awareness among communication professionals generally.
When it came to public statements and disclosure, lawyers felt the communicators’ tendency to communicate openly and transparently results in a risk of disclosing information, which may lead to liability or future litigation.
Another perceived area of conflict was balancing speed and accuracy. Almost every lawyer emphasised the need for certainty before communicating in a crisis. But this response appeared to show little appreciation that crisis decisions must be made quickly on what is known at the time, which is typically incomplete.
For example, in my experience, there is no need to hold back on an apology where it is warranted. It’s how and what you say that is important. The gentle language of genuine empathy delivered in the right tone at the right time is a powerful human response which can fundamentally alter the perception of how the company is dealing with the crisis. To hold this back because of potential legal risk can be even more damaging.
Bad apologies can often be a lightning rod for further criticism and help create the perception the company is out of touch. Good apologies are recognised and appreciated as such.
When the lawyers were asked to nominate the main strength they bring to a crisis, they nominated not their legal expertise, but an ability to be calm and predictable.
Several also noted they are “officers of the court” and accordingly have a duty to integrity and truth and honestly representing the law. One respondent added that a further strength was the ability to see beyond the strict letter of the law. “A strength we bring,” he said, “is knowing what appropriate and good judgement is, not just what is legally possible.”
When asked to identify what communicators bring best to a crisis, while the lawyers recognised the communicators’ ability to develop succinct messages, they instead nominated the communicators’ understanding of stakeholders.
Some lawyers conceded they were inclined to over-complicate messaging. One lawyer said communication practitioners: “…understand the imperfections of human nature better than lawyers. They understand the gladiatorial nature of media better than lawyers.”
There was a recognition both “sides” need to develop a better appreciation of each other’s roles. An improved understanding would lead to greater mutual respect for what lawyers and communicators can each contribute when a crisis strikes.
When conflicting advice arises, several lawyers stressed the importance of what they called a “hand-in-glove” approach. It was the key, they said, to achieving the best possible outcome for the organisation.
Every corporate legal counsel knows that sometimes their advice is accepted and sometimes it isn’t. As one of them said: “It’s important that the client knows my job is to advise, but you don’t have to follow my advice and I won’t be offended if you don’t, because there may be reasons why you follow some and not all of it, or not any of it.” Another added: “In the end a lawyer simply needs to be clear about their advice and the consequences of not accepting it – and the client will make the final decision.”
The likelihood of disagreement, and the severity of consequences, is never greater than in the pressure-cooker environment of a crisis. But often when faced with this situation, organisations will fall back on what is legally right. Unfortunately, this doesn’t always consider the socio-political and economic context, nor the values of the company.
Rio Tinto’s destruction of the Juukan Caves is a perfect example of a decision which was legally and commercially ‘OK’ but totally unacceptable on many other levels.
Legal advice is critical in crisis management, but it should not trump other advice purely because it is legally right. No crisis or potential crisis is ever solely about legal matters.
The key lies in balancing legal and communication advice along with operations, business, marketing, human resources, accounting, government relations and a host of other disciplines.
Crises are pressure cooker situations, where things move quickly, and decisions are made under stress and duress which can impact decision making in different ways. One of the best pieces of advice in a crisis is for the CEO, the crisis team, and the board to use their values or their purpose as the compass by which they make their final decisions.
Craig Badings has 30 years’ experience advising major corporations and senior executives in Australia and South Africa on their reputation in good times and bad. Much of that time has been spent working in the trenches with boards, management teams and in-house communication teams assisting them with issues and crisis preparation and management, media coaching and media relations, communication strategy, social media strategy and thought leadership. This work has included a cross section of sectors such as: financial services, professional services, education, medical devices, property and construction, FMCG, telecoms, tech as well as various government sectors. Craig has coached thousands of executives in presentation, messaging and media performance. Connect with Craig via email or LinkedIn