Related: In-House Legal Departments Should Brace for a Trump Tweet
Those inquiries—Garland wouldn’t name the companies—have come from across the U.S. economy, from the tech industry to the defense sector, reflecting the anxiety over not just a public relations hit but, possibly, harsher regulatory treatment.
“It is a new category of risk in the market,” said Garland, co-chairman of Covington’s white-collar defense and investigations practice group and a former top lawyer in Eric Holder Jr.’s U.S. Justice Department.
The National Law Journal caught up with Garland to talk about how companies are preparing for Trump’s Twitter ire. The conversation was edited for clarity and length.
National Law Journal: During the campaign, Trump identified companies like Carrier and Ford about their plans to move manufacturing abroad. During the transition, it was Boeing over the cost of replacing Air Force One. On Wednesday, it was Nordstrom. To what extent are you hearing that Trump’s Twitter account is becoming a concern for the American business community?
James Garland: It would be hard to overstate the degree of anxiety that our corporate clients have about finding themselves in the crosshairs of a Trump tweet outburst. We’re getting tons of questions and requests for guidance about how to prepare and whether you can prepare for something like that, and then if it happens, what’s the playbook. So it’s a big issue. It’s, I think, unprecedented. And I don’t see any signs of it abating. It’s something that American businesses are going to grapple with as long as Trump is the president.
What’s the nature of the concern? Is this all about taking a PR hit, or does it go more broadly to Trump reaching down into some agency and influencing a regulatory or enforcement action that harms a company?
It’s all of the above. The fact of the matter is that Trump is extremely polarizing. A negative tweet from President Trump can be very bad PR. A positive tweet from President Trump can be very bad PR. A negative tweet from President Trump that results in a company having to make nice with President Trump—the very act of conciliation can cause major fallout with various important stakeholders of a company. That’s just pure reputational market injury.
There’s a sort of separate category of harm that can come from the president directly weighing in on a company’s business decision or regulatory position on something. The president is in charge of the executive branch of the U.S. government and has an effect on procurements, has an effect potentially on enforcement decisions, on regulatory decisions that can be very important to clients. It’s all of that together.
So take me into the situation room. What does the battle plan look like for a company that’s criticized by the @realDonaldTrump account—maybe even with a retweet from the @POTUS account?
On the preparedness front, what we’re telling our clients is look, you need to try to do your best to anticipate any actions you might take, any decisions you might make, that potentially could precipitate a Trump tweet or remarks by the president that would go after you or criticize you. And then have a team that’s ready to go. You’re not going to be able to anticipate perfectly what happens. But you need a team ready to go that’s thought about this in advance. You need to have for each of these issues a placeholder statement in mind. You should have some draft tweets. You need to give some thought about who’s going to be the decider internally in your company about how to react if you find yourself in that situation.
Yesterday, we saw Nordstrom take to Twitter to explain that it pulled Ivanka Trump’s brand due to slumping sales. On this question of “to tweet or not to tweet?” what are the considerations to weigh when deciding how aggressively you respond in public?
I think it would be the rare case when it behooves a company to engage in a line by line Twitter exchange, certainly one with the president, maybe with others on Twitter. I think a company in the retail sector that isn’t regulated and knows its customer base, knows its demographics and can sort of triangulate who’s buying its stuff against who’s supportive or not supportive of the president, that allows more flexibility on that front.
But a company that’s in the defense space, or in the pharma space or in the financial services space or in another regulated industry, those companies and really most companies, I think, will want to have a very measured response.
You’re going to want to avoid escalating. You’re going to want to avoid, certainly, inflammatory rhetoric. You want to make sure you’re correcting the record. You want to get real facts out there and do so calmly and dispassionately.
There’s a real imperative in these situations to engage quickly off-line. Take it offline. You don’t have anything to gain one way or the other through a public exchange with the president.
Is there any circumstance when it makes sense to brush it off?
I could see that in the right situation, but I think it’s a pretty rare situation. It’s sort of the surreal world we’re living in, but this is the president of the United States. In most cases, you can’t ignore a comment he makes about you, even if it’s at 3 in the morning on Twitter. It’s probably a rare case, and maybe never, that you can just blow it off.
Who needs to be involved? Which hands are needed on deck?
It’s interesting. When the president of the United States is saying something publicly and negative about your company, it is almost necessarily going to get the attention of the highest level of the company. The CEO, the board chair—that level.
When do the lawyers need to get involved?
I do think it’s important for lawyers to be involved in thinking through responses at the table. Particularly when we see the potential for stock market movement around some of these communications decisions, you want to have lawyers weighing in on what the potential legal ramifications could be.
What are the other legal considerations?
It’s also the case that if you have dealings with the U.S. government, if you’re seeking approvals, if you’re in the midst of a procurement process, even if you’re under investigation by the Department of Justice or some other regulatory agency, you don’t want to say anything that will jeopardize your standing in those interactions.
Likewise, you want to have lawyers thinking about whether the president’s actions, announcing positions on you and your comp, might give you an opportunity for legal arguments in those matters. I could see the president really creating legal risk for the U.S. government by some of the statements he’s made. If he’s commenting on a company that’s in the midst of a DOJ enforcement action or if he’s undermining the fairness of a procurement process through his comments, that could actually cause risk for the U.S. government that I think lawyers for companies are going to be in a position to exploit.
We’ve been talking about tweets. But Uber was swept up into controversy recently over its CEO’s involvement on an economic advisory council, from which he’s since stepped down. That, of course, spilled over onto Twitter with the #DeleteUber movement. How are companies dealing with that area of engagement with the Trump administration?
I think there is a judgment, and everyone’s trying to see what other companies are doing. There’s a bit of a not wanting to be too far out of the mainstream aspect of this. A lot of this is sector specific. The tech sector might take one approach, which is probably a little more adversarial with the administration. The financial sector could be different, the life sciences sector could be different. But it’s a lot of the same calculus. He’s a controversial, polarizing guy. And any engagement, good or bad, is risky. Companies don’t like risk. So I think you’re going to see some very careful decision-making out of the most sophisticated companies who are probably looking to dance through the raindrops without getting wet.
As much as companies don’t like risk, they don’t like being in the position of having to react to someone else dictating terms. Is there a solution to put an end to this, or do companies need to just stay on their toes?
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