So Your Organization Has Been Sued: What Now?

Lawsuits come in all shapes and sizes. Those that become “business killers” are in a category by themselves and have increased in frequency in this last recession, especially securities cases. This provides unique opportunities for PR executives. But it also requires us to see the strategic issues in broader terms, and thus beyond the tactical mechanics of “message.” That means using analytical approaches and solutions that are more comprehensive, integrated and carefully aligned with stakeholder concerns and interests. Shaping perceptions is a strategic outcome here, not the strategy itself.

STAKEHOLDER TRUST IN JEOPARDY

Common to potentially lethal legal actions is that they detail allegations—whether from a private party, a regulator or law enforcement—that materially impact most or all of an organization’s stakeholder bonds. Accusations related to management’s obligation to disclose specific information to shareholders about earnings fall into this category. So, too, does a product liability case, charges of insider trading or options backdating, to mention just a few. Such allegations can seriously erode stakeholder trust, regardless of the eventual outcome of the case in court. The damage is early and fast, and few organizations survive as they previously were. If they do, it’s usually with a new CEO and lower revenues.