Last week in our Trends & Tactics section, we gave you the first results of PR NEWS' exclusive survey, conducted with Peppercom and law firm Davis & Gilbert, showing
that most PR pros have done little to safeguard themselves against corporate scandal.
In this week's issue, we unveil the topline findings and talk with Peppercom Managing Partner Steve Cody and Davis & Gilbert Partner Michael Lasky about the implications of
the dramatic results.
PRN: These findings show a fairly widespread understanding that PR professionals are potentially at risk in today's business environment. But it seems as though most firms
aren't doing much to manage that risk. What can they do?
M.L.: Every agency needs to really have some awareness of the regulatory and legal landscape into which their clients' businesses operate and specifically how the work they're
doing for the client may impact on some of those areas. So, for example, if you're doing some Web-related work for a healthcare product, you need some understanding of what the
FDA says about what claims need substantiation, what is a health claim, what is a drug claim, what is a cosmetics claim.
There is much said about the PR professional being a partner's client. The way you get to that place is by showing you know there needs to be sensitivity to certain
factors.
PRN: You advise PR professionals to take stock of agency/client agreements and insurance policies to guarantee they're protected from liability. What specifically do they need
to look at?
M.L.: Have the right agency/client agreement. In this ever-litigious society, it's important that indemnification be as broad as the scope of the work the agency is doing. The
indemnification should indemnify the agency for any claims that arise from work the agency does for the client, based on any documentation or information the client supplies to
the agency.
When agencies have insurance, it's usually an "errors and omissions" policy, and usually covers errors or omissions in print or when the claim arises from something said. But
if it arises from some application of new media, the standard policy does not cover that unless you have a new media "rider."
PRN:: What has Peppercom done as an agency to protect itself since corporate trust began breaking down?
S.C.: We have Michael Lasky construct all our contracts and agreements. We also had our insurance company take a look at our coverage about nine months ago to make sure it
reflects the new landscape.
This survey should be a wake-up call to any small- or mid-sized public relations firm. What you don't know can kill you. You can't choose "I'm too focused on my business or my
clients' business" as an excuse.
PRN: What steps does Peppercom take internally to ensure it's protecting itself?
S.C.: Most agencies tend to concentrate on a few areas. We're into corporate, financial and professional services. We make sure our comptroller attends the Council of PR Firms'
sessions related to that subject. The Council can be a huge resource [in learning to protect yourself from liabilities].
M.L.: Another point is to review your document retention policy, and if you don't have one, create one. Are the documents going to be retained indefinitely? For a six-month
period? And if you no longer work for a client, will you give the documents back? Why risk a third party subpoena for a client you no longer work for? This all falls under the
heading of "an ounce of prevention ... (Contact: Lasky, 212/468-4849; Cody, 212/931-6159)"
Survey Results
The good news: 67 percent of respondents claim the PR industry is more aware of the potential liability that every firm faces when involved in disseminating information to the
public.
But … Only 28 percent say their firm or company is being more careful about disseminating information.
A whopping 72 percent say they are either somewhat or not at all careful about disseminating information.
The good news: 67 percent believe they are making strides in understanding the legal and regulatory landscape of the business of public relations.
But … only 38.7 percent consistently get a written and signed agency/client contract and internal sign-offs with indemnification clauses.
No respondents have secured insurance, increased their coverage or reexamined the scope of their insurance coverage.
47 percent do not know if their firm/department has a document retention policy. Another 16 percent are sure they do not have such a policy.