By Chiara Lamacchia.
Much more like Will Smith's slap to Chris Rock during the 2022 night of the Oscars, you can pass your entire life building up a reputation for yourself and it can be gone in a matter of seconds.
Reputation is an intangible asset and a factor of success for any organisation – and it is one of the most exposed corporate assets during a period of crisis.
Also, nowadays, the speed at which we can communicate globally has significantly reduced the amount of time a company can take to fix things – it is inevitable that Legal and PR might experience some distress during turbulent times.
Unquestionably, all parties should be sitting around the table to pass it through a crisis. However, Legal and PR – both masters of words – are usually in contentious relationships, and when a crisis occurs the disconnection between the two seems even sharper.
I propose an in-depth look at the intersection of law and PR, starting from real cases, analysing the Legal-PR relationship and looking at the best ways to collaborate.
The overexposed reputation
In the overconnected world we live in there is no time to fix things. All boundaries and distances are lost. All brands are constantly overexposed, overconnected and over-scrutinised. In this sort of world, attention is the new scarce resource. In addition to that, as humans like drama and gossip, guess when you get all attention you wanted? Right there, as soon as you misbehave (presumably or not).
To make it even worse, we do not read anymore – we swallow extremely short headlines, without looking at the substance.
Nobody seems to care anymore. A title, an interview excerpt, an image, a comment, an interpretation, a way-too-short summary of a concept – and that is it: we are convinced of this or that in a matter of seconds.
When there is juicy news around famous brands, we witness the carnage not only of the brand but also of its individualities. This results in the media circus we all know about: excessive speculations, obsessive, continuous, relentless broadcasting about the same subject and repeated repetitions of the same pieces of information over and over again.
This can come to distort the legal presumption of innocence into an early presumption of guilt in the media. In some cases, it delays or prevents law enforcement; in others, it accelerates it. In all cases, it is a factor to take into account when corporate reputation is at stake.
We all can expose a brand in a matter of seconds (100 milliseconds, to be precise – one click). And when corporate reputation is so overexposed, a prompt and right response to criticism is very decisive.
Concrete case studies
Nothing can clarify the extent and weight of reputation and legal risks as cases within a real-world context. Everything should always start with observation. If we look at cases of corporate reputation, we can see first-hand the importance of the connection between Legal and PR.
Chanel denied clients with a residency in Russia to buy their products. Ferrero recalled products after dozens of salmonella cases in a chocolate factory in Belgium. Situations like these calls for reputation damages and legal risks.
Surely, there are some issues that organisations can control, such as negligence causing industrial or transport accidents and system or product failures. It also includes active conduct like fraud, malpractice, corporate governance failure and abusive behaviours.
In some other cases, it can be out of the organisation's control, such as cyber-attacks, piracy, terrorism, natural disasters or political instability or issues arising from policies and regulations or controversies on religious or political grounds. These cases still require prompt action by the organisation.
There are so many cases involving Legal, PR and corporate reputation, that I had a hard time deciding what to include. On this matter, I would like to add a small disclaimer. Cases are mentioned in a simplified way, with the specific aim to give a sense of the significant extent and impact of events involving legal and reputation. The depth and nuances of each specific case is by far not taken into account.
Roche & the Seveso disaster (1976) – An industrial accident in which a chemical manufacturing facility in northern Italy overheated, releasing chlorine and dioxin into a residential community.
"Children started showing skin damage. (…) Residents were evacuated from their homes. People were told not to eat fruit and vegetables from the contaminated zone. Pregnant women were advised to have abortions, as the long-term effects on unborn children were not known. Today, the population is still under medical surveillance" [1].
Roche eventually paid about $168 million in damages to cover decontamination, a disposal dump, and new housing for affected residents. On a PR level, the company is still acknowledging the disaster till now [2].
— More in the category "Catastrophic event producing loss of human life or environmental disasters": Costa Concordia's cruise ship disaster, BP's Deepwater Horizon oil spill, BP's Texas Refinery explosion, Elgin's gas leak, RBS's system failure, Union Carbide's Bhopal disaster.
Starbucks & Tax avoidance (2009) – Reuters published a report revealing how Starbucks, the famous US coffee chain, was using intricate tax arrangements to pay little or no corporation tax in the UK [3].
This resonated in the public opinion with boycotting campaigns and sit-in protests all over the UK. Starbucks publicly apologised and offered to pay £20 million more in tax over two years.
— More in the category "Tax evasion": Amazon, Apple, Google, Starbucks (again), Thames Water, Vodafone … the list is endless.
Nike & Asian 'sweatshops' (the 1990s) – In 1996 pictures of a child in Pakistan assembling Nike soccer balls were released [4]. It was soon followed by the leak of a confidential audit of a Nike factory in Vietnam, revealing a toxic sweatshop.
Nike's stock price fell in value by 50%. The company took the hard way, fully acknowledging the problem – Philip H. Knight, Nike's CEO at the time, stated:
‘'The Nike product has become synonymous with slave wages, forced overtime and arbitrary abuse. (…) I truly believe that the American consumer does not want to buy products made in abusive conditions.'' [5]
— More in the category "Forced labour, slavery, inhuman and degrading condition of working" we are literally spoiled for choice. Just to name very few: Amazon, Apple, BMW, Deliveroo, Gap, H&M, Huawei, Microsoft, Nike (again), Primark, Samsung, Sony, Victoria's Secret, Uniqlo, Volkswagen, Zara & (too) many more.
Johnson & Johnson & the Tylenol contaminated pills (1982) – 250 deaths and illnesses in various parts of the United States were being linked to contaminated capsules of Tylenol.
Johnson & Johnson chose to take a large loss, withdrawing all capsules nationwide and dispelling consumer fears. Tylenol story does not end in the '80s – many other recalls have been made till 2010, making this the "drug marketer's worst nightmare" [6]
— More in the category "Product liability with product recall": Bridgestone/Firestone Inc., Coca-Cola, Ferrero, Ford, General Motors, McDonald's, Perrier, Phillip Morris, Toyota…
Facebook & Cambridge Analytica (2018) – Facebook (now Meta) gave access to the personal data of up to 87 million Facebook users to Cambridge Analytica, a political consulting and strategic communication firm. [7]
Facebook was fined £500,000 by the UK's Information Commissioner's Office.
On top of it, Facebook changed its name to Meta (allegedly sooner than expected and allegedly to clean its reputation). A name change is not enough to fix a reputation: even after the rebranding, the public's trust in Meta dropped by 5% and its PR crisis will take the long run.
— More in the category "Unauthorised or misleadingly authorised data gathering, storing and selling to third parties": Amazon, Google, Meta (and all brands related to it), Netflix & more. These companies own an unparalleled volume of data on individuals, including our personal data and behaviour (i.e., the way we interact, use, decide, select, etc). These companies developed powerful AI and analytics to profile, trigger emotions, influence behaviours, target strengths and weaknesses. In doing so, they inevitably expose their brand to criticism and crises.
From facts to general observations
I spent time observing and studying multiple and different cases concerning a corporate crisis, where reputation was affected and the legal dimension of the case was evident. I did not only focus on those cases where the company lost its legal battle.
That was the first element I noticed: even in the case of a court ruling in favour of the company, the guilt on a public opinion level remains, in particular with regards to class actions, that have a catastrophic and long-lasting impact on reputation. Some other patterns were even more interesting:
Legal sanctions have become more substantial. Similarly, reputation damages are heavier, also because the public has more access to information and is more sensitive towards heath, security and rights in general.
The dimension of a crisis and the legal issues related to a single company can affect a whole industry (e.g., big pharma, banking sector).
The reputation of the individuals in the organisation can play a key role (negatively or positively) both in legal risk and reputation (e.g., Meta, Tesla, Amazon, Microsoft, Apple).
There is rarely a frame to allow PR and Legal to work well together and there is a visible underestimation of the interdisciplinarity between Legal and PR, the lack of which usually maximises both reputational and legal risk.
When the legal dimension was not taken into account early, it usually affected the crisis negatively at a later stage. Equally, when the PR dimension was not taken into account early, it affected the crisis negatively in terms of reputation.
The PR department is not very appreciative of the preventive role of Legal, even if reputation damages are connected to the legal risk. This is aggravated by the often-inadequate perception of law and legal professionals.
Legal is not well-equipped to cooperate with PR. In some cases, also the Chief
Legal Officer's function concerning PR was underdeveloped or underused.
The root of misalignment
Legal and PR have radically different points of view of reputation.
On a PR level, reputation is built around intangible values (e.g., consistency, credibility, relationships, reliability, quality, transparency, trust) and tangible ones (e.g., CSR, investment in people, diversity, environment). The main objective is to establish trust between the company and its audiences (customers, stakeholders, shareholders and the media). The best strategy is to tell the truth and accept the consequences.
On a Legal level, reputation is built primarily around ensuring compliance with regulations and avoidance of legal sanctions to maintain the company's license to operate. The main objective is to protect the company from harm (mainly financial) that can arise from any actor (customers, stakeholders, shareholders, the media, competitors, former/current employees, etc). In this sense, telling the truth and admitting wrongful done is not the best strategy.
We cannot allow ourselves to be stuck in the dichotomy of Legal vs. PR, between the say it all and meet in court PR approach or no comment and break reputation Legal one. We could risk it and flip a coin to decide but we need a balance between preserving the brand reputation and minimising future legal backlashes.
Undoubtedly, regardless of objectives and strategies, both Legal and PR have a common goal: ensuring the short-term end of the crisis and the long-term health of the organisation.
Possible directions
How could we achieve a better relationship between the Legal & PR teams? In a nutshell, they need to learn that working together represents an opportunity, given that the legal conversation and the PR one are inevitably connected.
Tips for Lawyers
PR professionals are not there to merely support your legal strategy: understand their concerns to come up with alternatives
Be proactive and establish with them upfront the objectives of any communication action
Share information with them (as legally appropriate) so that they can provide solid advice
Understand how the media work and what motivates them to finetune your legal strategy
Bonus: Remember that people like short sentences, not paragraphs!
Tips for PR professionals
Always strive to understand what the legal concerns are and try to come up with alternatives
Include the legal team early in the process as lawyers need more time to evaluate all possible outcomes
Be clear on the fact that you need Legal to highlight issues and then discuss them together
Be sure to understand all the consequences of circumventing the legal team anyway
Bonus: Build the relationship with your legal team, just as you do with journalists!
Tips for C-level
Create the right space for collaboration and allow full integration of law and PR
Any reputational issue should always involve both Legal and PR teams early in the process
Develop integrated processes for reputation management and make it business-as-usual
Educate the PR team on the role of law for reputation, and the Legal team on the reputation dynamics
Bonus: Ultimately, in case of disagreement on what needs to do, it is all in the hands of management: if all parties had a real go to solve the problem together, you have all elements to make a decision!
Next?
To sum up, it is important to recognise that during a crisis, two debates are happening contextually: a Legal one to convince the judge; a PR one to influence the public opinion. These two conversations are very much connected: one influences necessarily the other and vice versa. The recognition of this double dimension is the first step to a decisive path forward.
Notes
[1] “Scars of Seveso still linger” – SWI swissinfo.ch https://www.swissinfo.ch/eng/scars-of-seveso-still-linger/2129968
[2] Annual Report 2021 – Roche – Page 103 https://assets.cwp.roche.com/f/126832/x/32d69fd141/ar21e.pdf
[3] Special Report: How Starbucks avoids UK taxes – Reuters 2012 https://www.reuters.com/article/us-britain-starbucks-tax-idUKBRE89E0EX20121015
[4] Six Cents an Hour Sydney, H. Schanberg – Life Magazine 1996 https://laborrights.org/in-the-news/six-cents-hour-1996-life-article
[5] Nike Pledges to End Child Labor And Apply U.S. Rules Abroad, J.H. Cushman Jr – New York Times 1998 https://www.nytimes.com/1998/05/13/business/international-business-nike-pledges-to-end-child-labor-and-apply-us-rules-abroad.html
[6] The Tylenol Crisis, J. Edwards – CBS News 2010 https://www.cbsnews.com/news/the-tylenol-crisis-one-recall-is-a-misfortune-five-looks-like-carelessness/
[7] European Parliament resolution 25 October 2018 on the use of Facebook users’ data by Cambridge Analytica and the impact on data protection (2018/2855(RSP)) (2020/C 345/10) https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52018IP0433&from=EN
About the Author Chiara Lamacchia works in legal, marketing and corporate strategy for global organisations across different sectors, after an LL.M. from Bocconi University (Milan, Italy) and an MSc in Marketing from Edinburgh Napier University (UK). Chiara is the Founder of lawrketing.com and withoutconsulting.com, promoting the adoption of ground-breaking ways of using the law for innovation and competitive advantage. Besides, among other things, she authored and published the book "Lawrketing – What Business Never Realised About Law", introducing a new concept, lawrketing, combining law, business, marketing and innovation.
Connect with Chiara on linkedin.com/in/chiaralamacchia
#ChiaraLamacchia #legalprofessionals #communication #legalinnovation #futurethinking #PR #reputation
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