Making good news out of bad
26 April 1999
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The entire tax department of a large City firm has walked out to join a rival. The head of department took the team largely because he hated the senior partner and is not afraid of telling people so. Journalists are on to the story and will soon be calling. Advise the firm's managing partner on how to handle the situation.
The key to achieving the best possible outcome lies in minimising the damage and putting forward positive news/angles. The first thing to do is offer a set of golden rules for the managing partner:
Make sure you are in possession of all relevant facts at all times.
Be open and swift in all your communications, because clear, early, accurate information from official sources reduces the chance of insidious rumours beginning to circulate. It is also better to offer news to journalists proactively and possibly set the tone, than to be reactive or, worse, caught on the back foot.
Show you are in charge of the situation.
PRs often have to think laterally. There may be an intriguing possibility which would sidestep some of the trickier aspects of this problem and which merits further exploration with the managing partner.
If the firm does not intend to replace the tax department - perhaps it has been unprofitable or underperforming, too focused on personal rather than corporate tax and thus not in step with the firm's new strategy of dealing exclusively in commercial work - then there is scope for a deal.
The departing lawyers' restrictive covenants could be waived, leaving them free to seek business from their former tax clients. In exchange there would be a commission or equivalent payable to their previous firm - a percentage of their billings on these clients for a limited period. This would have a number of valuable advantages:
There would be a real, financial incentive for the former head of tax to bite his tongue and play down his dislike of the senior partner and his negative reasons for leaving.
The managing partner can be seen to pat his former partners and colleagues on the back and say he perfectly understands their wish to move to this excellent rival, because the firm is no longer competing for tax business.
The managing partner can talk of the strategic move away from personal tax as a sign of the firm's increasing focus on City/commercial work.
All in all, putting forward the story of an "amicable parting for positive strategic reasons on all sides" is much more convincing to all audiences if the firm is able to point to a mutually beneficial financial arrangement. It can be seen to be pleased to be receiving an income stream from a departed team which at one time looked set to damage the firm's reputation.
This is one example of a possible "golden handcuffs" strategy. There may well be others and the possibilities should be fully explored with the managing partner.
Other than this, my advice to the managing partner is very much the standard crisis PR procedure:
Analyse who will be most affected by or interested in the news.
Consider possible good news stories/angles which can be credibly linked to the event.
Make sure you are in possession of all the relevant facts at all times and that you are open and swift in all your communications, thus showing yourself to be in charge of the situation and reducing rumour-mongering.
The financial director of a top-10 firm with a thriving white collar crime practice has absconded with firm funds. The media have got a sniff of the story but are unable to get all the facts. What do you advise the firm to do?
It is important to act normally - calls from the press are often innocent and unrelated to the crisis. Establish who knows within the firm. Partners or associates who have any contact with the press must be firmly advised not to discuss the matter with anyone.
The key question is, do you spill the beans immediately? I do not think there are any right or wrong answers, but my initial advice is do not lie. Clearly, the police or fraud squad will be involved, so any comment must be carefully considered and you should always be aware of the possibility of libelling the director.
One senior person should be appointed as spokesperson. Someone outside the practice should be used only if it is the norm for them to speak on behalf of the firm, or if the situation is admitted. The spokesperson should listen to what the journalist is asking and say they are unable to get all the facts at present. A polite but firm, "Sorry, but I am not prepared to comment on this," is perfectly appropriate at this juncture.
If asked about the whereabouts of the financial director, the spokesperson should say: "He is no longer with the firm, but I am not prepared to say more than this." The journalist should also be advised, in an unthreatening way, not to run with a story that they cannot substantiate.
Other partners should respond to any enquiries by saying that the spokesperson will call the journalist back.
Eventually, however, the situation will develop and the story will emerge. No oral comment should be made but I would advise preparing a short statement saying that the firm took action as soon as the theft was known. This should be released to all legal press as soon as the first press enquiry comes in. Shock and dismay should be expressed and perhaps the (apparent) unblemished record of the financial director to date could be given. The media will know that with criminal charges, speculation and comment will be severely limited.
We would then prepare a procedure for press handling through any trial. We would discuss possible developments up to verdict and comments upon a conviction or acquittal. We would also consider interviews along the lines of "a salutary lesson" afterwards.
It is important to keep clients informed by phone and letter and reassure them that no client accounts have been affected.
A firm is acting for the trust of a popular and glamorous foreign princess who has died in a car crash. Although you and the trustees agreed on legal fees and both sides were happy, your £2.5m bill has now been leaked to the press causing outrage and "fat cat" jibes. How should the firm respond?
If the fees are accurately reported, and particularly if an actual bill has got into the hands of journalists, all that can be done is to limit the damage. It is important to portray the trustees as united and unconcerned about the fees, otherwise it will be hard to safeguard the reputation of the firm and the partner responsible.
Ideally, the spokesperson should be one of the trustees, because third party endorsement in this situation would be helpful.
They should be encouraged to speak openly to the press rather than waiting for journalists to call. This can help to contain escalating interest in the story.
The spokesperson's messages should include:
Yes, I agree these fees do appear to be on the high side, but they are entirely in accordance with the fee agreement negotiated between the trustees and the firm before work began.
You must understand that a complicated and enduring trust of this sort requires a lot of work to set up. It involves tax planning, public interest issues and careful research supervised throughout by a senior partner of [n] years specialist experience, to ensure that its beneficiaries are those which the princess would have wished. This helps to explain these seemingly high costs in the first year. Thereafter, having been professionally established, it will be able to operate for very many years with much lower legal fees being incurred.
All the trustees are aware that many hours invested by the firm have not been charged for, and that the charges incurred have been no higher than the standard charges levied by a firm with this specialist experience.
The trustees have a responsibility to ensure that the fund is well managed and the donations accumulated are not dissipated unnecessarily in legal fees.
You will know that the firm undertakes a considerable amount of work on a pro bono basis, is a member of the Solicitors' Pro Bono Group and supporter of Business in the Community [insert as appropriate]. It is unreasonable to expect the firm to do complex work of this nature without appropriate remuneration at the fair market rate.
It is unfair to claim that this firm is staffed by "fat cats" - the partners and assistants do not receive more than is commonplace in most firms of this size and standing and, indeed, its commitment to continuing to undertake legal aid work [use if true] would indicate that it is also aware of the importance of providing access to justice.