PR versus legal strategy in managing corporate crises: Some ground rules

Your phone rings at 6:07 a.m. It’s Jim, from building security, letting you know that the FBI is executing a search warrant in your investment fund’s offices as he speaks. And they’ve been there for an hour.

You call your general counsel and head straight over.

Jim wasn’t wrong. You arrive to find what appear to be nearly a dozen FBI jackets going through files. To make matters worse, someone has tipped off the media and now your phone and email are blowing up with investor inquiries, wanting to know what’s going on and whether they can pull their money.

Turns out there’s a dual SEC and DOJ investigation into an isolated allegation that you know for a fact is not true and, even if it were, does not affect your investors’ capital. But they, understandably, want answers. And your silence will be construed as guilt.

A quick Google search for your fund has the article about the raid pinned neatly to the top of the search results. Soon all of your investors will be calling. What do you do?

THE PROBLEM AND THE PLAYBOOK

Whether it’s this scenario, corporate malfeasance, a ransomware attack, environmental disaster, product liability claim, or employee walk-out, the problem and playbook are largely the same.

When it comes to crisis management, two types of players dominate the market: public relations agencies and law firms. Each occupies one side of the crisis coin. Like the fabled story of two blind men trying to identify an elephant (one touching the tail and the other the toenail), PR and Legal often differ in strategy as they view the crisis through different lenses.

LEGAL VERSUS PR

Investor emails are mounting and becoming more desperate in tone. General and outside counsel caution against making any statement, since today’s seemingly innocuous soundbite may not age well in the total mix of information that develops. You may know that there’s no “there, there,” but your attorneys don’t. And they can’t just take your word for it.

The allegations are finite, but now that the FBI is combing through everything, who knows what else they might discover. After all, the government can always find something on even the most scrupulous company if they look hard enough. Minor irregularities can be assembled into charges by an ambitious assistant United States attorney.

Your investors need answers. So you push your attorneys to come up with something you can say to curb mass investor flight. To appease you, legal has prepared the following statement:

“We are actively cooperating with the government’s investigation through compliance with legal process. We cannot comment further on an ongoing investigation, but will keep all interested parties apprised of material developments as appropriate.”

It’s the worst holding statement you could imagine. This might be best practice in front of the SEC, but on the street, it’s corporate suicide.

You call your outside PR team only to be informed that this isn’t their type of crisis—and, therefore, isn’t contemplated by the additional “crisis management” fee you’ve been paying steadily over the past three years. They will have to defer… to… legal.

Ahh the perfect circle, spiraling down into Dante’s inferno. Legal hates PR.

They need to focus on the investigation, which means containment. Mums the word. PR, after all, is messy. “You can’t add to the record,” your attorneys caution. And you can’t start answering questions without going down rabbit holes, not to mention waiving attorney-client privilege.

Meanwhile, plaintiff firms have already started blogs encouraging your investors to hire them for a class-action lawsuit (just in case). You’ve done nothing wrong, but the optics are not good. Your firm won’t survive in silence.

You have entered the PR / Legal Chasm. Best legal practices and best communications strategy are at odds with one another during most legal-oriented crises—but they don’t have to be mutually exclusive. Your job is to press your advisors on both fronts to put their heads together to come up with real-world solutions. If you don’t already have an adept crisis manager, you might appoint your general counsel to assume this role.

CRISIS MANAGEMENT STRATEGIES

Once PR and legal are in the same room, they will come up with an investor statement that satisfies both of them. Here are some ground rules for drafting such a statement:

1. Focus on what you know. This means running an internal investigation so that you can anticipate what the informational landscape will look like once the government has finished its investigation. Anything you say needs to be true and accurate. You will have to live with that statement throughout the investigation or case.

2.  Find the safe ground that legal agrees can do no harm. This might look like a list of what the investigation is not about. “There are no allegations about mishandling investor funds. Nor does the investigation call into question our proven track record of outperforming the S&P year after year.”

3. Own the crisis. While whether to admit fault is case-dependent, don’t minimize, deflect, or shirk responsibility. The buck stops with you.

4.  Practice crisis Jiu-Jitsu. Don’t allow this to be the only thing in the news cycle. It’s time to launch a PR blitz that focuses on all of the important work you are doing. That might include an announcement about your compliance program ramp-up.

5. Fire-drill the crisis. Jump in your time machine and get legal and PR in the same room before there is an event and develop a strategy. This is a good time to issue-spot and agree on how they will work together.

In times of crisis, legal and PR are playing two very different games. Your job is to force them to collaborate. Silence is a defense lawyer’s best friend and a PR exec’s worst nightmare. But they should be able to find common ground, when forced. That, however, can take more time than the news cycle will allow. To minimize this, consider hiring outside help to prepare for the unexpected in advance.

Ryan Blanch is a defense attorney and pr executive whose dual firms, Repute PR + Law, collaborate to manage crises, reputations and brands.