Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/727548
74 LEXPERT MAGAZINE | OCTOBER 2016 Jaime Watt is the Executive Chairman of Navigator Ltd. He specializes in complex public-strategy issues, serving both domestic and international clients. WHEN AN ORGANIZATION faces a crisis, it nearly always faces two kinds of jeopardy: legal and reputational. In the crisis-manage- ment field, these two jeopardies have long been dealt with consecu- tively. e legal issues would take precedence, and once those were sorted, we'd move on to fix the reputational problems. Times have changed. Today, with the prevalence of Google and social media, reputation is not something that exists only on a news- paper's front page for a few days. A quick online search can dredge up hundreds of articles detailing every minor aspect of an organi- zation's activities for years. Because of this unending flow of in- formation, we now live in a world where both jeopardies must be dealt with contemporane- ously. We now have to think about jeopardy in a different way. Instead of silos of risk, where one comes before the other, we must think of a crisis situation as an enterprise-wide threat. One of the best ways of thinking about com- peting jeopardies is the way we think about competing rights. You don't need to be a constitutional lawyer to understand that tensions exist between competing rights. e right to free speech occasionally comes into conflict with the right to se- curity of a person being maligned. e right against unreasonable search and seizure oen abuts the need for national security. We have come to expect that, when it comes to rights, we balance them, or we reconcile them. We assess proportionality of effect. In Western democracies, top courts oen repeat the maxim that no right is absolute — that they must be balanced and reconciled. Similarly, the pressure clients face in times of crisis requires us to weigh and bal- ance their competing priorities. is new approach to risk is not to convince lawyers to put aside legal risk. Rather, consider this example: our firm oen advises interna- tional companies hoping to invest in Canada or the United Kingdom. And, as in most countries, these multinationals are subject to rules and procedures governing foreign own- ership. Many parties will weigh in: courts, regulators, politicians, investors, customers and competitors. e transactions can take months to complete. In the past, the financial team would put together the deal, and then lawyers would worry about getting approvals, managing claims, and so on. en, when everything was completed, the cor- porate-reputation firms like ours would ensure that investors, share- holders and customers saw the advantages of the new company. But today, these events happen at once. If media report that le- gal processes are going badly, investors get nervous. Loss of inves- tor confidence drives down share prices, and this gives licence to politicians and competitors to criticize the deal, making it seem less likely to succeed. is, in turn, makes regulators nervous and makes it more difficult for the legal team to obtain approvals. A vicious cycle of failure can ensue if these steps aren't handled effectively. But a well handled transaction can generate positive financial coverage and support an easier road to the legal and regulatory objectives. e problem is that the legal team fears legal risk, and the com- munications team fears a reputational risk that will lead to loss of market capitalization and future investment. But it comes down to this: if organizations wait for pleadings and discovery before ad- dressing the reputational issues, there may be nothing le to fight over in court. As Mark Twain once remarked, "A lie can make it half way around the world before the truth can put its pants on." It is difficult to strike the right balance between the two jeopar- dies. e old days were easier, to be sure. But we don't live in those days anymore. Lawyers and communications professionals no lon- ger have the choice of separately handling each type of risk. We must work together and find the cross-disciplinary solution that balances the realities and jeopardies our clients face. ILLUSTRATION: CLARE MALLISON Simultaneous Jeopardies Today, a PR disaster can sink a company faster than a lawsuit. That requires cross-disciplinary teamwork > WITH GOOGLE AND SOCIAL MEDIA, REPUTATION ISN'T SOMETHING THAT EXISTS ONLY ON THE FRONT PAGE | COLUMNS | BY JAIME WATT CHANGE AGENT