COVID-19: Managing Legal and Reputational Risks
Many organisations are faced with different types of public relations crises during this Covid19 pandemic
Almost all employers have been faced with some employee layoff or work health and safety standard issue. Airlines and shipping companies have been faced with passenger rights and contractual issues due to closure of borders. Hospitals have been faced with issues about treatment of patients and confidentiality. Wholesalers and retailers have been faced with accusations of price gouging. Companies are on the brink of insolvency and there is much uncertainty about the subsistence of seemingly formidable business empires and their ability to perform contracts.
Often, these issues are coupled with a lawsuit or threat of a lawsuit and therefore must be handled with utmost care. If the company or industry is large, provides sensitive or essential services, or produces popular brands, the situation will tend to be magnified in the media thereby creating a public relations nightmare. When this is all over, the truth is some companies will fail because of the PR disaster which it suffered and not so much the loss of income stemming directly from the pandemic.
The public nowadays demands corporate transparency and information travels faster than ever. Companies have had to rebrand after suffering one major PR disaster.
Companies are understandably eager to protect their reputations and brands and sometimes hastily issue statements and give interviews in an attempt to clarify or mitigate the reputational risks involved in the situation.
However, every statement, press release, interview, tweet, letter, Whatsapp message or phone call made by the company or an employee of the company from the time the crisis arises, is potential evidence which may be used against the company and may affect its defence of a law suit.
One misstatement, which accidentally identifies a patient or employee by name or reference or discloses confidential medical or employment records, can easily expose an institution to an action for breach of confidence or subject them to a constitutional action for breach of privacy rights.
The legal risk can be compounded if it turns out that the statement is not true - easily giving rise to a multimillion-dollar action for defamation.
It gets even more complicated where details which are protected by a non-disclosure clause in a contract are disclosed. That can be a very expensive breach of contract.
Once a statement is issued to the public by the company, any contradictory statement made by the company in an affidavit or witness statement during subsequent court proceedings may have the effect of discrediting the reliability of the company’s witnesses and can even erode its entire defence.
There is also a school of thought that public perception about a case can affect the way a case is decided. Defamation cases are particularly susceptible to being affected by negative public perception as they are heard by juries.
Proper PR crisis management can not only save your company from a multi-million, or billion-dollar lawsuit, but can improve shareholder confidence, affect consumer perception of the brand and pave the way for your company’s survival when the dust settles.
Companies tend to come to lawyers when they are served with the lawsuit papers or even worse, when judgment is entered against them. However, both the legal and reputational risks in every PR crisis should be carefully managed and a legal mind involved in the process.
Marketing teams and “communications specialists” tend to be focused on protecting brand perceptions and increasing sales but are not always aware of the legal implications of certain statements or actions. Lawyers are focused on reducing risk and if possible, avoiding liability.
A legal eye should be involved in drafting press releases and vetting those drafted by marketing teams.
Litigation lawyers can advise on the risks of potential disclosure of certain information, what constitutes an admission of liability, potentially defamatory statements and statements which are likely to adversely affect future legal proceedings.
Where your company’s name is being mentioned in the media or other public spheres, legal advice should be sought about whether the company may have an action for loss of goodwill or defamation of its business and commercial reputation. It may even be possible to obtain a cease and desist order to prevent unauthorized use of the company’s name or trademark.
During this time of crisis, a variety of voices should discuss the response – including your marketing team, HR department, those interacting with customers and your attorney-at-law. Even before your company is hit with a crisis, your entire PR team should educate employees about careful management of sensitive information and dealing with the media.
Amanda Montague is an Associate Attorney-at-Law at Myers, Fletcher and Gordon and is a member of the firm's Litigation Department. Amanda may be contacted via email@example.com or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.