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Minimising internet threats to the corporate reputation without blowing the budget

November 2009 - Media, Entertainment & Sport. Legal Developments by Schillings.

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With every year seemingly bringing a new way for reputations to be tarnished instantly and globally online, it’s easy to blanch at the scope and expense of dealing with such threats. The situation is not helped by an abundance of lawyers proffering radical legal steps that appear to resolve any unpleasant situation, when the truth of the matter is that no measure is guaranteed to succeed and the real skill lies in deciding when to pounce and when to remain poised.

No two companies are the same in how they divide responsibility for their reputation between the communications team, compliance and the legal department. However, the common thread is that when a serious reputation threat arises, the subject will instantly leap to the top of the board’s agenda. From Socrates and Nietzsche through to Benjamin Franklin and Warren Buffett, the implications for a reputation of a sole aberration have been recognised for centuries, compelling executives to act quickly in the face of perceived threats.

These are the ‘easy’ situations as in-house counsel – a clear and imminent threat in which the board will invest money to deal with the problem. Often though a decision has to be made over what merits action and what is simply part of the low-level venom that, to some degree or other, every business attracts.

Proliferation of threats

Dealing with the myriad threats is not helped by the ease with which a campaign against individuals or brands can now be mounted. As recently as ten years ago, to damage a corporate reputation took near-manic determination. Client lists would have to be stolen, letters or flyers printed and phone calls made, in the hope that a journalist might be persuaded to look at the story. The defendants in the infamous McLibel case (McDonald’s Corporation, McDonald’s Restaurants Ltd v Helen Marie Steel and David Morris [1997]) had to publish and distribute an information sheet to McDonalds’ customers to be deemed a sufficient nuisance to merit the 20-year legal battle that ensued.

This seems rather quaint by contemporary standards. A motivated individual can optimise a blog post for maximum Google prominence in a matter of hours, promoting an obscure, malicious web page disproportionately in the search rankings; a Wikipedia entry can be doctored (and stubbornly re-doctored when corrected); for particularly technology savvy organisations, forays into microblogging platforms, such as Twitter, can render them liable to all manner of vitriol under the appropriate ‘hash tag’.

But it’s not just the greater options available to campaigners that pose a headache for those tasked with protecting reputations. Mistakes – both innocent and mind-numbingly stupid – are more easily made and punished. To paraphrase the Second World War propagandists, it used to be loose lips that cost reputations, as journalists’ appetite for watering holes was traditionally a recognised facet of the news-gathering operation. Now it is harder to contain news – a confidential internal process is just a Facebook status update away from gaining wider attention – while barely an employer in the country has not had to deal with the consequences of employee stupidity in some form. Supermarkets are no strangers to dealing with bored night-time staff wreaking havoc with consumer confidence through the use of their mobile phones and YouTube; Virgin Airlines felt the backlash of consumer umbrage at staff indulging in unkind comments on its clientele.1

All of this presents a daunting prospect to in-house lawyers seeking to protect reputations against myriad threats with a finite budget.

Prevention better than cure

It might seem easy to simply wait until a threat crystallises before taking action – calling in the lawyers when a Facebook group gets noticed by the tabloids. While there is a lure to this approach, it is usually the least efficient way to deal with reputation threats, from a time, cost and reputation perspective.

Roles of teams and external advisers

It is almost unheard of for media and reputation threats to blindside an organisation entirely. More often, the relevant information has not reached the right people. Communications departments generally deal with the press, calling in the legal department to deal with flagrant libel issues. This narrow focus on traditional threats from the press or dissatisfied customers reduces the preparatory steps legal teams can take to minimise the risks.

Any media or reputation crisis has its origins, frequently from within the business. Leaks of embarrassing information may come from employees, ex-employees or contractors. Allegations of wrongdoing generally stem from those with enough knowledge to ensure that their complaints are well-received. In an environment in which the media has a salacious appetite for stories contrasting the executive elite with the rest of the population, the power of staff to cause damage through their knowledge of home addresses, earnings and other perks is not to be underestimated.

In many cases the human resources department is well placed to point out potential threats, such as employees known to be disgruntled or those departing bearing a grievance. Likewise the media monitoring firms feeding into the communications team are often able to spot the early signs of larger threats through obscure postings on blogs and forums.

It may sound less than innovative but the key to dealing with such threats before they proliferate lies in ensuring that those with the appropriate authority and expertise are made aware of them at a time when any action they can take will be effective. In practice, this means choosing who those people will be and establishing a mechanism whereby threats can be reported to them. Only by doing so can monitoring agencies and PR staff be able to assess the level of threat posed and be aware of the threats arising.

Tipping point

It would be easy to run through a list of possible dangers to a corporate brand and reputation, and the legal steps that can be taken to counter them, but the truth – despite what many lawyers will tell you – is that most threats should be ignored and it does more harm than good to try to counter all of them.

The phenomenon of legal steps to prevent the dissemination of information actually leading to the greater dissemination of that information is known colloquially as the ‘Streisand effect’, following Barbara Streisand’s attempts to prevent the use of photographs of her Californian home resulting in greater attention being drawn to their availability.2 This effect explains in part why English courts often prohibit the reporting of the fact of an injunction concerning confidential or private information – prohibitions vocally lambasted by a frustrated press – since doing so tends to result in further attempts to find the withheld information.3

On a more basic level, misjudging the level of a threat can result in spending thousands of pounds on legal fees to silence a critic that no-one would have listened to anyway.

The trick is in making a judgement call on whether to act, how to act and when to keep an eye open in case the threat increases. For example, faced with an allegation of misfeasance about a company, a rough guide to the level of risk posed could be taken from considering five factors:

  1. the credibility of the maker of the allegations;
  2. the audience that the initial publication enjoys;
  3. the likelihood that the material would be picked up sufficiently online to pose a threat or reach the mainstream media;
  4. the type of information and how serious the allegation is; and
  5. the appetite for that sort of information at the time.

Credibility is best considered by putting yourself in the shoes of a journalist reading the post. Would they believe it? What are the credentials of the maker of an allegation? Much as words that are obvious nonsense do not give rise to a claim in libel because a reader would not think less of the subject as a result of reading them, so too any sensible reader stumbling across such an article online is likely to discount it. However, if it is an ‘insider’ or someone attempting to position themselves as a whistleblower, there is a far stronger chance of other publishers believing the story.

The credibility is also influenced by the audience a publication enjoys. If a disgruntled employee were to set up a blog for the specific purpose of denigrating their employer, the likelihood of it finding a readymade audience is negligible (the internet is already littered with vast swathes of unread blog material). Such posts are likely to pose little threat of mass dissemination, unless the terms of the page manage to achieve a particularly remarkable search engine placing. At the other end of the spectrum, some messageboards and blogs are pored over and linked to by others, not least by journalists pressed to generate more stories. In any given sphere it is not difficult to identify the few most prominent publishers who – with due sensitivity to their commercial status – ought to be treated as seriously as a newspaper.

Key, though, is the status of the allegation. Taking all other risks into account, there’s little point taking action over an allegation that is not particularly serious. By the same token, a post with limited publication, little risk of onward repetition and an obscure author may still merit action if it contains an extremely damaging allegation or piece of information that cannot be ignored. This is a subjective test – an obscure article about bankers’ remuneration would have drawn little attention three years ago but is now a hot topic.

These considerations help to assess the tipping point at which an obscure article starts to become a genuine reputation risk. This might be because the mainstream media pick up on it or the story becomes too big to be contained in online media, but it is at this point that preparatory steps cease to be of use and the only option is to restore reputation.

Fight battles that can be won

There are countless tools that can be used when dealing with reputation threats. Sensible publishers making allegations in error can be dissuaded, malicious sources can have action brought against them or their internet hosts deterred and court proceedings can be instigated. However, any steps that are taken must be used cautiously to ensure that the legal action does not become more noteworthy than the underlying dispute.

Threats must be kept in perspective. It is easy for a small threat to take on greater menace by the time it has percolated through a slew of management meetings. In-house counsel’s instincts in offering a detached opinion are invaluable in reaching a rational view of the magnitude of the threat. External PR advisers and lawyers also act as a useful sounding board for an objective reaction to any publication.

Just as collaboration between the communications teams and the lawyers is vital in establishing the existence of risks, so too it is key to dealing with threats as they take hold. As external lawyers dealing on a daily basis with reputation threats, the importance of working closely with PR advisers cannot be understated. When dealing with newspapers, communications teams retaining channels of communication with a journalist while the respective lawyers trade pleasantries is often key to toning down likely publication through a blend of reasoning and implicit threat. PR teams can also engage and reason with amateur publishers, rather than merely have lawyers make demands. By the same token, lawyers have had to learn new approaches when dealing with amateur publishers. It’s all too easy for them to slip into the aggressive terms of discourse that lawyers are hardened to after years of exchanges. To amateur publishers without the benefit of the media law training and copy checking that newspapers employ, what appears to be a standard shot across the bows can be taken as an unprecedented and grave attack.

The most severe responses need to be reserved for the most serious threats. In Liskula Cohen v Google, Inc (Blogger) [2009], the Canadian model Liskula Cohen illustrates this fine balancing act; dealing with a blog post dubbing her a ‘skank’, Cohen successfully obtained an order in the Manhattan courts requiring Google, whose Blogger arm hosted the offending site, to identify its customer. The attendant publicity the case brought serves as a reminder to consider the range of likely outcomes before embarking on legal action. However in many cases – as with Cohen – the publicity generated by bringing the complaint will remain largely positive, and will indeed assist in rebutting the allegation that brought initial concern. To take an example closer to home, directors of Sheffield Wednesday Football Club sought a court order identifying users of a fans’ website to bring a claim in libel against messageboard posters who had made unpleasant false allegations against them. As always in these cases, a balance is to be struck between the vindication achieved in rebutting the allegation and the resulting publicity, adapting tactics accordingly.

Just as the consequences of bringing an action have to be considered, so does the likelihood of success. As Eady J noted in Max Mosley’s claim against News Group (Mosley v News Group Newspapers Ltd [2008]), there is a certain futility to making a court order banning the dissemination of material that has already reached so many as to have lost its privacy or confidentiality (or any real likelihood of the order having significant effect).

Don’t be afraid of acting to restore a reputation

Faced with the seemingly endless options for damaging material to be copied, it is tempting to adopt a ‘head in the sand’ approach, ridiculing online material and waiting to see whether any serious journalist is likely to latch onto false material lurking online.

Problems arise when there is no prior warning that such material will be reproduced. Newspapers faced with declining advertising revenue have fewer journalists to cover a constant amount of stories, reducing the time available to research and verify articles. Examples abound, from the use of Wikipedia as a resource for obituaries (inevitably resulting in errors) to the extraordinary rehashing by Bloomberg of a six-year-old article on United Airlines, resulting in the company’s share price dropping 99% in 15 minutes’ trading.4

While these are extreme examples, hard-pressed journalists will still turn to the internet as a source of information, and the results can be calamitous for reputations should it be damaging information they find.

Keeping a lid on costs

All potential actions cost money, and while in an ideal world there would be an endless fund to deal with the countless issues arising online, in truth it very rarely exists. Typically, management priorities will dictate what funding is available. If there is a particular allegation that a CEO wishes to see challenged, funds will be found for it.

For the rest, though, options exist to deal with threats either on a one-off or a rolling basis. The increasing popularity of fixed-fee billing means that deals can be reached to expend set sums of money pursuing the deletion of allegations of particular concern to a business. Similarly – particularly during critical corporate periods such as a hostile takeover, IPO or the run-up to an AGM – monthly fees can be agreed, providing the comfort of a certain level of monitoring and built-in removal of articles.

The starting point is to know what threats exist and their status. It may be that dormant material rests in the press archives, or that certain websites are known to be harbouring damaging material. A wealth of options – sometimes available at a pre-agreed price – exist to deal with these. Steps can be taken to remove offending material from websites. Copyright could be acquired in material a business no longer wishes to see reproduced. If the concern focuses mainly on the risk of the mainstream media picking up on allegations, or there is concern that dealing with a poster will cause more harm than good, solicitors’ letters addressing the threat of publication can be researched and prepared.

Perhaps the most useful step, though, is educating teams on the diverse range of issues to look out for. As a generation of bankers has discovered to its horror, their families’ social networking pages are a rich vein of material for journalists to mine if they wish to illustrate the trappings of an illustrious lifestyle. Indeed, when the Conservative MP Damien Green was arrested at Westminster, the press quickly found pictures of family holidays on Green’s children’s friends’ Facebook pages, prompting Green’s wife to warn about the dangers of posting such material on social networking sites.5

Where private or confidential information is to be protected, the key is to ensure it does not slip into the public domain beforehand, so giving key executives briefings on practical steps they can take can reap benefits further down the line. Human resources teams can also develop appropriate briefings to warn staff of the risks and their obligations in the use of social networking and distribution of work material. Events staff should be made aware that engaging an external photographer for a champagne reception without securing copyright in the pictures first invites all manner of problems.

This may all sound like yet more demands on the finite legal budget, but taking steps at an early stage offers the possibility of reducing the emergency spend needed to stop information that has begun to circulate, instead budgeting for an educational investment to help reduce the likelihood of the problem arising. Establishing clear lines of communication between the in-house communications team and the in-house legal team may seem obvious, but making the relationship work smoothly can pay dividends later. As explained in the introduction, the responsibility for dealing with the reputational issues facing a company will affect both the communication and legal teams so early discussions on where the issues overlap will help avoid the tensions that may arise. It’s important to take into account the different views as to how to react to a publication or a specific issue, in particular when it comes to determining whose budget should be spent and how. A stalemate situation can waste valuable time and make matters worse.

There are still no guarantees when it comes to dealing with the vast number of reputation threats, but by adopting a mixture of preventative steps to reduce the likelihood of damaging material coming to prominence with pragmatic and objective consideration of the threats against the potential benefits, it is at least possible to manage the roles and costs entailed in doing so.

By Chris Scott, solicitor, Schillings.

E-mail: chris.scott@schillings.co.uk.

Notes

  1. 1Reported by The Independent (and others) 1 November 2008.
  2. 2The same effect has been noted in the US in cases concerning commercially confidential information – see Massachusetts Bay Transportation Authority v Anderson, et al, Civil Action No. 08-11364 (2008) in which attempts to suppress the publication of details of a security flaw in an Oyster card-style system simply led to the information being more widely accessed.
  3. 3www.guardian.co.uk/commentisfree/libertycentral/2009/sep/23/gagging-orders-media-injunctions
  4. 4Wall Street Journal, 11 September 2008, ‘Single web hit led to UAL glitch, Tribune says’.
  5. 5http://iaindale.blogspot.com/2009/04/exclusive-damian-greens-wife-on-10.html

Liskula Cohen v Google, Inc (Blogger) [2009] Index No 100012/09

Massachusetts Bay Transportation Authority v Anderson, et al, Civil Action No 08-11364 (2008)

McDonald’s Corporation, McDonald’s Restaurants Ltd v Helen Marie Steel and David Morris [1997] EWHC QB 366

Mosley v News Group Newspapers Ltd [2008] EWHC 1777 (QB)