Crisis-Management

Rahm Emanuel, the former mayor of Chicago and White House chief of staff to President Barack Obama, once famously said, "Never let a good crisis go to waste." We couldn't agree more with the sentiment, and thankfully 2019 provided plenty of headline-grabbing crises, which, if used correctly, can be gifts. By examining an array of front-page issues, from the massive data breach at Capital One to the "Operation Varsity Blues" college admissions scandal, 2019 was stuffed with headline-grabbing crises that impacted the reputations, financial health and futures of the organizations and individuals involved.

For lawyers who are tasked with mitigating their clients' risk and the communications professionals who work alongside them, the more well-known corporate crises of 2019 provide a valuable opportunity. By examining both the good and bad responses to crises, we can learn from the mistakes and successes to respond more thoughtfully in the years to come.

What is striking is that while the types of crises may change and evolve, the core issues companies and individuals face typically remain largely the same, as do the keys to successful crisis communications: preparation, consistent and truthful messaging and enacting a plan to avoid reoccurrence.

That's not to say that crisis response today is easy. With the proliferation of social media and a news cycle often measured in minutes, it's harder than ever in fact. But there are patterns to crises that can help us respond better. With this in mind, we consider some of the emerging—and long-established—crisis scenarios that presented themselves over the course of 2019 and offer takeaways for lawyers and their clients going into 2020.

The Bad Apple

The college admission scandal known as "Operation Varsity Blues" may be among the most memorable scandals of 2019, but certainly one AmLaw 50 firm Willkie Farr & Gallagher would like to forget.

In March, news of firm co-chair Gordon Caplan being charged in connection with the investigation had become public. While his offenses were not related to his job, it was important for the firm to swiftly distance itself from Caplan and his actions. He was quickly put on leave upon being charged and his relationship with the firm ended once it became clear he would plead guilty. The firm made clear, "we do not tolerate behavior that runs contrary to our core values."

In hindsight, it may be obvious that severing ties under these circumstances with an employee, regardless of how senior he/she might be, is a no-brainer. But that doesn't make it an easy thing to do in real-time, when you are working against the clock to distinguish fact from rumor and treat fairly a colleague who most likely helped build your firm and has loyal friends and supporters. Add to this equation the likelihood that the media is calling, demanding to know what the firm's position is and why it's taking so long to respond to their requests for comment.

Life's a Breach

 High-profile cyberattacks continued in 2019, with Capital One's breach, which affected more than 100 million customers, taking center stage. But for every cyberattack that makes headlines, thousands more go unreported. Why? Perhaps companies are getting better at communicating about them, making it less painful on the customers whose information has been lost or compromised. The professionals are acting decisively, investigating thoroughly and being proactive about communicating with customers when they know something bad has happened. In addition, teams responding to breaches are more experienced and sophisticated than ever. As a result, they often require less time to investigate and disclose, resulting in fewer angry customers who will take their complaints to the media and the courtroom.

The Ostrich Head

Ignoring a problem and hoping it'll go away is a classic symptom of organizations experiencing crisis denial. This year brought no shortage of these gems, highlighted by Boeing. In the race to keep up with its European competitor Airbus, Boeing completely neglected the quality control protocols that were put in place to protect employees and customers during the development and rollout of the 737 Max. Boeing had employees flagging problems almost from day one, which went ignored. And the push to keep working harder and faster and to look the other way when problems were raised, tragically cost 346 people their lives. There were also financial repercussions; as of November 2019, the crisis had cost Boeing up to $10 billion in revenue and compensation to their customers and families of those who died in the accidents. Boeing not only lost its CEO but will continue to lose revenue from grounded fleets in 2020 and will face more lawsuits from pilots and families of victims.

The Rose-Colored Glasses

 One has to assume Softbank either failed to do its due diligence or performed it well and decided to look past WeWork's epic corporate governance shortcomings and questionable financial decisions when it opted to invest almost $10.5 billion in the unicorn darling. And perhaps hubris and an unwillingness to admit a mistake led to SoftBank's decision to infuse another $9.5 billion in the lead-up to WeWork's IPO. Whether there was one root cause or just an epic series of mistakes made by SoftBank and its leader Masayoshi Son, it cost the bank and its investors $4.6 billion and counting. The lesson here? If you're going to make enormously risky bets with your investors' money, have a good answer to the question "why?" before the blunder makes front page news. It's quite possible that going through the exercise of asking the hard questions up front will help you make better decisions.

The Crisis by Association

One of the big takeaways from 2019 was that crises halfway around the world and outside your company's control can still become yours quickly. We saw this time and again last year when organizations including the NBA, Cathay Pacific, PwC and Zara had to very carefully balance taking a stance on the upheaval in Hong Kong, supporting their employees who wished to take part in the protests, and continuing to do business in mainland China. That balancing act cost several multinational companies key employees and hard-earned goodwill with the Chinese government, and presented global communications and ethical conundrums for legal and communications teams around the world.

The Vigilante

The rise of the gig economy and consumers' increasing habit of turning to online forums to vent have created a perfect storm for reputational concerns.

Airbnb fell victim to this dynamic in October, when a Vice.com reporter wrote about accidentally unearthing a nationwide scam, where hosts were baiting and switching renters by promising a certain location then moving them at the last minute, citing maintenance issues. The company was slow to respond to the report. Concerns around safety and trust were compounded by a fatal shooting in an Airbnb location just days later.

Ultimately, Airbnb announced a series of adjustments to the platform, including that it is aiming to verify 100 percent of listings by Dec. 15, 2020—a move many were surprised to learn wasn't already happening. As companies continue to rely upon freelance support in years to come, they'll need to be increasingly proactive on communicating with customers around how they are taking responsibility for their contract employees' actions and what they are doing to protect customers.

The Takeaway

 As the two groups most often tasked with dealing with the aftermath of their clients' misdeeds, misdirection and mistakes, what should lawyers and crisis communicators take away from this roundup? First and foremost, it's important to realize that while most of the scenarios discussed above feel new to 2019, they're actually just old crises, repackaged and sold as new news.

Since the invention of the modern corporation, C-suites have been turning a blind eye to their shortcomings and hoping that they go unnoticed. Occasionally they get caught and a major recall ensues, the stock price plummets, and plaintiffs' lawyers file lawsuits. Since the dawn of time the entitled and enriched have sought to exploit the system for their gain, bribing and cheating their (and their children's) way up the social, educational and financial ladder. This too is nothing new.

What is new is that there are now very foreseeable patterns that emerge prior to a crisis really taking root, that if identified and addressed early enough can be mitigated and neutralized. Law firms that take the time to review high-profile crises will have an advantage if or when their own clients face an incident.

The exercise will give them the opportunity to think through whether they are vulnerable to the same risks and how that risk would play out at the company. This also gives law firms an opportunity to raise the conversation with internal stakeholders who may have been avoiding the idea of a crisis hitting their company, ensure the right people are prepared internally and externally, and the proper protocols are in place when a crisis arrives.

Crises will never stop hitting companies, but the reasons they make the news will continue to change. By keeping a close eye on both the consistencies and changes, lawyers and crisis communicators will continue to build their skillsets and help their clients stay out of the headlines.

Zach Olsen and Jesse Dungan are members of Infinite Global, an international communications firm. Their work includes advising law and professional services firms on crisis communications preparation and strategic response.