How to stay one step ahead of litigation threats in a business (un)usual world
17 July 2020
As lockdown restrictions eased over the summer, many of us breathed a cautious sigh of relief. The ability to eat a meal out, or enjoy a tentative trip to the pub, made us feel the danger was starting to pass. Yet for businesses, the threats and potential dangers seem to be increasing. The uncertainty, stress and tension of the last few months has created an environment ripe for an explosion of litigation against companies.
Since COVID-19 made its dramatic entrance into the world stage earlier this year, the potential for legal issues arising as a direct result of the pandemic has been huge. By its very nature, this crisis increased opportunities for organisations to do things wrong. World events moved fast, and with rules and guidance changing almost daily it has been hard to keep up. Even with the best of intentions, sometimes things go wrong – and many businesses will inevitably have made mistakes along the way.
The implications of this could be far-reaching; every dispute and litigation threat poses a risk to business from a reputational perspective, as well as raising privacy issues for senior executives caught up in the turmoil. As lockdown eases, it’s vital for every business to identify the potential trip hazards they may soon encounter – and prepare. Some simple pre-emptive actions taken now can mitigate threats in the future.
1. Horizon scanning
Mapping threats to the landscape now, to anticipate issues in the future, makes an enormous difference to whether or not an organisation can respond quickly and effectively to issues, and emerge with reputation intact.
For the most part, this task will fall to General Counsel. It’s worth noting that doing the right thing from a legal perspective doesn’t mean automatic immunity when it comes to public scrutiny and criticism. The “we’re all in this together” ethos of the last few months has led to a natural emphasis on morally correct, as well as legally correct, leadership. Complying with the spirit of the law is as important as complying with the letter of the law.
As well as looking ahead, it’s safe to assume companies and individuals will face criticism for decisions and actions taken a month or two ago. As a leadership team, be honest with yourselves about where you did well and where you could have done better in responding to the crisis. Identify mistakes, apologise where appropriate, and make a change of course if necessary. It is dangerous to fall into the trap of believing that previous missteps will disappear.
2. Understand the issues
The most likely issues organisations will face in the short-term relate to their employees: can workers be forced to return if the workplace is compliant with safety guidelines; are the measures brought in to comply with the COVID-19 guidelines discriminatory against those with children, care responsibilities or medical conditions; privacy and data protection concerns around the collection of health data; redundancies; an increase in grievances, disputes and tribunal claims; and an increase in liability or litigation if employees or customers get ill.
Disgruntled employees are an often-overlooked threat to business reputation. Insider threats can be very damaging: people within the business often have easy access to information or documents which could be of interest to competitors, regulators or the press. If people are losing their jobs or feel like their employer is not keeping them safe, they could pose a genuine concern. While most businesses do all they can to look after their people, it’s still worth considering what information could be leaked and what damage it would cause in the hands of a journalist or competitors if someone feels hard done by.
Then there are potential issues with suppliers and customers to consider. These include contractual disputes if one or other party cannot perform their obligations; payment delays; supply chain issues if suppliers go bust or aren’t complying with safety guidelines. Now is the time to really pay attention to your supply chain and ensure standards are as high as you need them to be.
3. Be ready for action
If a dispute comes your way, there are still ways you can mitigate against the reputational fallout.
Firstly it’s important to take action as early as possible. As soon as there is a hint of an issue or dispute brewing, start investigating the relevant facts, evidence and information.
Once you understand the situation, it’s vital that your senior management team, legal and communications teams are all aligned on the facts, and the company’s stance. If these teams aren’t in sync, there’s a risk one will say (or do) something which impacts the other.
Next – think laterally. What else could impact on this situation? Your horizon scanning should have identified problems ahead of time, but checking in on this will keep you one step ahead. A digital audit will keep you across your online reputation, for example. Are there any issues with companies in your supply chain? Are your board members posing any kind of risk? Are your senior team’s social media feeds locked down?
Finally, if the dispute garners media attention, it’s important to control the narrative. A seamless relationship between legal and communications teams is imperative to ensure reporting is both accurate and fair. Unchallenged inaccuracies can quickly turn into facts, and a slight annoyance now can snowball into something much harder to deal with later down the line.
The new normal
Litigation, public disputes and regulatory investigations are not going away, and while they haven’t fundamentally changed because of COVID-19, directly or indirectly, the pandemic is likely to increase their number.
Taking action to deliberately look for problems might seem counter-intuitive – but improving your reputational resilience now could make a huge difference in the future. Sometimes things go wrong – but taking pre-emptive action can make the fallout a lot less damaging.
*The full article was first published in Global Leaders in Law here.