Posted: July 11, 2002
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Article SummaryI almost entitled this column “Lawyers v. Outrage Management,” because it’s mostly about the conflicts between what I advise my clients and what their attorneys advise them. The column starts by acknowledging that a legally ill-advised outrage management strategy can have disastrous legal repercussions. That said, it addresses a variety of reasons why most lawyers dislike outrage management even in situations where there are unlikely to be any legal ill effects. After a section on what outrage management can offer the legal process – that is, how lawyers might actually benefit from paying attention to outrage issues – the column zeros in on five genuine areas of conflict between law and outrage management: ignorance, silence, candor, apology, and tone. These are the areas where wise clients force their legal and communication advisors to find a middle path.

Lawyers and Outrage Management

I almost entitled this column “Lawyers v. Outrage Management,” because most of it is going to be about the conflicts between my recommendations to my clients and their attorneys’ recommendations.

First some disclaimers. My father was a lawyer; my younger daughter is a lawyer; my closest friend is a lawyer. I once planned to be a lawyer myself – and still browse longingly through my daughter’s discarded bar exam coursebooks from time to time. My quarrels with the legal profession are those of a wannabe insider.

And I do think those quarrels have abated somewhat. The attorneys I encounter are increasingly likely to have some experience with Alternative Dispute Resolution, and to understand that ADR is often a wiser course than litigation. Even more importantly, the attorneys I encounter are increasingly likely to recognize that just-barely-legal behavior tends to have high reputational costs, and that clients who value their reputations don’t want to be guided too close to that edge. (In recent months accountants may have begun to learn this lesson as well.) In fact, attorneys are increasingly likely to recognize that even client behavior that goes nowhere near the edge of illegality may nonetheless trigger public and stakeholder outrage – outrage that a purely lawyerly strategy is powerless to prevent or abate. For all these reasons, it is no longer rare for me to get at least qualified support for my recommendations from in-house counsel (though it is still rare for me to get support from outside litigators).

Still, more often than not my clients’ attorneys hover somewhere between skeptical and diametrically opposed.

In this column I want to address three questions. First, why do attorneys usually dislike outrage management? Second, what can outrage management offer the legal process? Third – and most centrally – what are the genuine areas of conflict between law and outrage management?

I am grateful to my wife, Dr. Jody Lanard, and to lawyers Bill Goldfarb, Ellen Sadat, Bob Collings, and Jennifer Sandman, for their helpful comments on an earlier draft. They’re not to blame for what I didn’t change.

Why Do Attorneys Usually
Dislike Outrage Management?

Let me start by conceding the number one reason why attorneys dislike outrage management: It is always possible that a legally ill-advised outrage management strategy can have disastrous legal repercussions. I will repeat this acknowledgment periodically throughout what follows. A LEGALLY ILL-ADVISED OUTRAGE MANAGEMENT STRATEGY CAN HAVE DISASTROUS LEGAL REPERCUSSIONS. Of course a litigation strategy that is ill-advised from an outrage management point of view can have disastrous repercussions on stakeholders’ outrage and the client’s reputation. That’s true too. The two criteria – protecting the client from adverse legal outcomes and protecting the client from stakeholder outrage – are independent. Sometimes they are compatible. Sometimes they are in conflict. Sometimes they seem to be in conflict but can be reconciled with a little effort. Sometimes you just can’t tell for sure.

Understandably, even appropriately, lawyers are a lot more focused on one of the two criteria than on the other. And understandably, even appropriately, I am a lot more focused on the other one. In other words, lawyers and outrage managers are natural antagonists even when our respective preoccupations aren’t actually incompatible. We need to do a better job of listening to each other. And the clients we share need to do a better job of listening to us both, forcing us to work toward compromise, and if necessary working out their own compromise.

Outrage management makes a lawyer’s job harder. The typical attorney figures that taking my advice may increase our shared client’s risk of liability, penalty, or punishment – outcomes the attorney is paid to prevent. Even if the risk is low, and even if there are counterbalancing reputational benefits, managing the client’s reputation isn’t the attorney’s main job. Managing the client’s liability, penalty, and punishment is. No lawyer is going to get into trouble by adopting a narrowly legal approach to the client’s problems, even if that approach leaves the client legally victorious but widely hated. But a lawyer who decides to take a wider view and okays a corporate mea culpa aimed at reducing stakeholder outrage may be in serious trouble indeed if the approach backfires in the courtroom … even if it accomplishes its goals outside the courtroom. This is what I mean when I say there are genuine areas of conflict. I’ll have a lot more to say about them in the last and longest section of this column.

But first, what else is going on when outrage management advice and legal advice contend for the client’s attention?

Outrage management advice is often bitter medicine – uncomfortable, incompatible with aspects of the corporate culture, threatening to managerial ego, antithetical to the client’s own outrage. Even when they see its merits, clients normally hate my advice. Admit you messed up, I tell them. Say you’re sorry. Let your worst enemies help make it right, and give them the credit. Understandably, few companies and few individual managers find this counsel congenial. Once I’m gone, a client may well turn to an attorney and ask, “We can’t do that, right?” So the attorney says, “Right.” The client breathes a sigh of relief and reports back to me, “Our lawyer won’t let us do that.”

Of course this is more the client’s doing than the lawyer’s. “We can’t do that, right?” provokes a different response than “Help us figure out how to do that without unacceptable legal repercussions.” As for “Our lawyer won’t let us do that,” nobody ever says, “Our communication consultant won’t let us do that.” Managers who treat their attorney as a strategic demigod and their communicator as a merely human tactician are going to end up with an approach to controversy that is seriously unbalanced.

But lawyers would have to actually be demigods to resist their special status in the business environment. Inevitably their counsel tends to expand from legal advice to general business advice or even specifically communication advice, all cloaked in the stature of their legal expertise. “I wouldn’t do that,” an attorney intones about my recommendation to admit a mistake or even apologize for one … and the client crumples. If I’m in the room, I can ask: “Why? Will it damage the defense in some way? What way? How can we do it without damaging the defense?” Sometimes there are good answers to these questions; sometimes they are answers that mean the client really shouldn’t admit the mistake quite that openly or apologize quite that abjectly. Other times – more often, it seems to me – the attorney’s response to my probing comes down to this: “Well, I just don’t think it’s a good idea.” In other words, there isn’t really a legal problem; it just feels wrong. Of course attorneys are as entitled as anyone else to have opinions about whether, when, and how to address stakeholder outrage. But it’s worth noticing that our disagreement is in my field, not the attorney’s.

None of this is meant to imply that you can safely make outrage management decisions without your lawyer at your elbow. There are real conflicts. Finding a decent balance between communication considerations and legal considerations can’t be done without your lawyer. But it can’t be done by your lawyer alone either.

As is clear from the above, the conflict between communication advice and legal advice is to some extent a matter of turf. Outrage management threatens the attorney’s control over how the controversy is to be handled.

But it’s not all about turf. Lawyers and outrage managers have, typically, different goals and different audiences … and therefore different preferred strategies. Lawyers (litigators, anyway) want to win lawsuits; their key audiences are judges and juries. Outrage managers want to resolve controversies; their audiences are hostile or potentially hostile stakeholders. Throw into the mix a third professional category, public relations practitioners. PR people want to woo passive support; their audience is the huge and generally not very interested public. This is an oversimplified version of reality, of course, but it’s instructive. Lawyers assume a determined enemy to be vanquished with convincing arguments aimed at attentive, neutral arbiters who will apply preexisting rules fairly; their model is the debate. Outrage managers assume a potential enemy to be calmed by gestures of sympathy, apology, candor, and collaboration; their model is the family quarrel. PR people assume an uncritical, inattentive, and undifferentiated audience to be subtly influenced by sound bites; their model is the advertisement.

The venues in which we three work have much fuzzier boundaries than our models. That is, a typical real-world controversy isn’t a debate or a family quarrel or an advertisement, but has some of the qualities of all three. There are stakeholders whose outrage can be ameliorated, and publics whose allegiance can be seduced, and litigants whose claims can be rebutted. All three efforts are proceeding more or less simultaneously, and they naturally affect each other. Lawyers see my outrage management effort chiefly as a threat to their litigation strategy. I see their litigation strategy chiefly as a threat to my outrage management effort. PR people see us both as threats to their seduction of uninvolved publics.

Even when we take on board each other’s problems, we do so with our own strategic habits, preferences, and preconceptions. A lawyer’s natural instincts about how to respond to an angry stakeholder – a potential litigant – tends to be very different from an outrage manager’s instincts. For similar reasons, lawyers and public relations people are often at each other’s throats. And for that matter, outrage management and public relations are also natural antagonists. These three fields – law, PR, and outrage management – offer three very different visions of how to resolve controversy.

In my early years consulting on risk controversies, I thought lawyers and PR people were my natural allies. After all, I reasoned, they were professional communicators too. Together we could teach the techies how to communicate. I quickly learned that techies were relatively easy to win over. They had no communication strategy of their own (having determined at an early age that they were better with things than with people), and would gratefully soak up any communication strategy that was offered to them … especially one as reductionist, almost hydraulic, as my approach to outrage management. Lawyers and PR people, on the other hand, already know how to communicate. It’s what they do for a living. Then I come riding into town with a different way of doing what they already do. Not surprisingly, I get some opposition.

There is a final reason why some attorneys dislike outrage management: It threatens their livelihood. I don’t want to overstate this; I doubt it’s as important as some of the other reasons I’ve mentioned. But consider some hypothetical numbers. Assume that in the absence of outrage management a particular controversy will lead to 100 lawsuits, and the defendant company will end up winning 60 of them. Assume that good outrage management can reduce the number of suits from 100 to 20; but at the cost of some ability to defend – instead of winning 60 out of 100 (60%), the company will now win 8 out of 20 (only 40%). Now, which is better for the company – fighting 100 cases and losing 40, or fighting 20 cases and losing 12? Obviously the latter. But which is better for the legal department or the outside litigator? The former, I suspect – it’s a better won-lost record and a bigger budget.

I’m not suggesting that lawyers are uninterested in preventing litigation. Far more cases are settled than are litigated. But an outrage management strategy that nips potential litigation in the bud, eliminating even the need for settlement discussions – and that does so in a way that could damage the prospects of winning the few remaining cases that actually get litigated – this is not a strategy we should expect a lawyer to love.

And again, remember, that’s if the outrage management strategy works. What if it doesn’t? What if my hypothetical numbers are wrong? Suppose my outrage management fails to reduce the number of lawsuits by reducing the outrage; instead, it lures greedy prospective plaintiffs into court. (I’ll have more to say shortly about the distinction between outraged plaintiffs and greedy plaintiffs.) The failed strategy simultaneously makes the cases harder to defend because the client has thrown away all available defenses in an effort to be candid and apologetic. So the client ends up fighting 200 cases and losing 120! Moreover, tort defense lawyers worry less about their won-lost records than they do about the damages their clients are required to pay. Similarly, lawyers involved in regulatory proceedings worry most about that one break-the-bank decision. So suppose outrage management does succeed in cutting the number of cases to 20, but those 20 can rely on the company’s own admissions to make a case for punitive damages … and suddenly each of the 20 cases is costing more than 100 “normal” cases would have cost.

I keep saying all that won’t happen. But it’s got to happen at least occasionally. Why should a lawyer take the chance?

What Can Outrage Management Offer the Legal Process?

First of all, it is important to recognize that litigation is largely about outrage. In assessing any controversy, it is useful to imagine a triangle whose corners represent three key motivators: greed, outrage, and ego. People oppose each other because they want to do themselves good (greed), because they want to do their enemies harm (outrage), or because they want to feel better about themselves (ego). Which of the three most distinguishes prospective plaintiffs who decide to sue from prospective plaintiffs with the same damage and the same chance of winning who shrug off their grievances? Are the people who sue really more money-hungry than those who don’t? Or are they angrier? I think it’s far more often the latter. Sometimes the outrage is justified by the defendant’s actual misbehavior and the plaintiff’s actual harm; sometimes it’s justified by the misbehavior without the harm; sometimes it’s justified by neither. Justified or not, it is usually outrage that gets people to sue.

Note that I am talking about individual plaintiffs here – people who see themselves as victims of corporate malfeasance and want justice or revenge or vindication. When companies sue each other, greed and ego are likelier motives than outrage. When an activist group files a lawsuit, more altruistic motives like setting a precedent and stopping harmful behavior tend to coexist with greed (the group wants media coverage, new members, contributions) and perhaps again ego. But individual plaintiffs are motivated chiefly by outrage.

Interview toxic tort plaintiffs on the day their cases go to court, and ask them what’s uppermost in their minds. Occasionally one will say, “I hope I get enough money to retire to Tahiti.” But a far more common response will be, “The son-of-a-bitch never even apologized!” Outrage, not greed, keeps plaintiffs going. Of course the plaintiffs’ attorneys are motivated largely by greed; their outrage is strategic. (That’s not meant to be an insult – readers who know my consulting rates know I have nothing against greed.) Lawyers try lawsuits for a living. But the plaintiffs themselves are usually more outraged than greedy. Yet the companies defending the lawsuits often think the plaintiffs are just greedy, and tend to act on that false assumption.

Now turn it around. What motivates the companies? The plaintiffs are accusing you at least of incompetence and probably of malevolence; they’re costing you endless hours and dollars. Odds are you’re outraged. But the plaintiffs undoubtedly think you’re greedy.

Much litigation, in short, is a conflict between an outraged plaintiff and an outraged defendant, each of whom misdiagnoses the other as greedy and each of whom is represented by a greedy (that is, professional) attorney. No wonder cases are so hard to settle.

To get a case to settle (when settlement is wise), each side’s attorney must persuade his or her client to abandon outrage for greed – that is, to act out of rational self-interest. Early on, plaintiff and defendant alike may well be determined to fight to the end “no matter what the cost”; they tend to call it principle, but it’s pretty clearly outrage. Their attorneys – especially the plaintiff’s attorney – understand that they must echo the client’s outrage or risk losing the client. “I can’t believe what they did to you! We’ll get the bastards whatever it takes.” Of course the plaintiff’s attorney’s own greed (rational self-interest) is usually on the side of settling, especially if the attorney took the case on contingency; one-third of a settlement without the burden of going to court is undeniably attractive. (The defendant’s attorney is likelier to be paid by the hour, and therefore likelier to be content to go to trial.) But in the early days, wise plaintiffs’ attorneys rarely recommend settling.

Now flash forward a year or so. For both defendant and plaintiff, the discovery process is revealing a more nuanced reality than either believed possible, as each side learns more about the other side’s strengths and its own weaknesses. Trial is looking less and less like certain victory and vindication, more and more like a crapshoot … and a possible humiliation. The defendant is also worrying about mounting trial preparation costs, and the possibility of a big-money punitive damages finding. The plaintiff’s attorney isn’t echoing the plaintiff’s outrage so much any more. Instead, he or she is warning that proving negligence will be hard, that under the Daubert ( “junk science” ) precedent even finding a witness to claim causation will be hard, that it might be wiser to convert the outrage into a pain-and-suffering damages claim and a higher settlement. Of course if the plaintiff refuses to settle and the case goes to court, the plaintiff’s lawyer will revive all that outrage for the benefit of the jury. But in the all-important pretrial period, the plaintiff’s lawyer is doing everything possible to ameliorate the plaintiff’s outrage.

Paradoxically, it is the defendant’s lawyer who may exacerbate the plaintiff’s outrage, and thus force the case to trial – or, more likely, delay the ultimate settlement and make it costlier. A large fraction of the risk controversies I work on have reached the point where at least one outraged stakeholder, usually more, has initiated a lawsuit. Typically there is legal correspondence in the file that almost looks like it was designed to keep the plaintiff outraged and thus keep the lawsuit alive. I assume these “lawyer letters” aren’t designed for that purpose; they are designed to stake out a claim the defense might want to make in court later, and to make it clear to the plaintiff how difficult and painful it will be to take the case further. Such a letter would have made a greedy plaintiff hesitate … but often it makes an outraged plaintiff all the more determined. This is an extraordinary irony. In the courtroom, it is the plaintiffs’ attorneys who keep jury outrage stoked, and they do it on purpose. But outside the courtroom, before a case gets to the courtroom, it may be the defense attorney who keeps the plaintiff’s outrage stoked, unintentionally. Outrage management expertise could help prevent this unintended outcome.

My main point here is that both preventing lawsuits and resolving lawsuits are largely about outrage management. Outrage management is the core of deterring prospective plaintiffs from suing (or prospective participants in a class action from joining the class); it is the core of persuading those who begin a lawsuit (defendants as well as plaintiffs) to accept a settlement offer.

As for winning lawsuits, once again outrage management is key. Now we are talking about the outrage of the jury (and the jury pool). The clearest example in U.S. jurisprudence is punitive damages, which are explicitly about outrage. The Exxon Valdez jury hit the company for billions in punitives mostly because it felt that Exxon had failed to show contrition. I do understand that there are powerful legal reasons not to acknowledge liability. As I will discuss in the last section, showing contrition without acknowledging liability may be a little self-contradictory, but it isn’t impossible or even all that difficult.

And showing contrition is essential to avoiding big-money judgments. The same principle applies in much smaller cases. Acknowledging misbehavior, saying you’re sorry, demonstrating that you have learned your lesson – these fundamental outrage management strategies are central to reducing punitive damages. And for the plaintiff’s attorney, of course, opposite strategies help fan the flames of jury outrage in order to maximize the punitives.

Just as important is the tendency of juries to stretch the law, if necessary, to accommodate their outrage at unsympathetic defendants. Much has been written about juries’ willingness to dip into corporate defendants’ deep pockets, to make a wealthy company pay even when the evidence that it actually caused that poor child’s leukemia is weak. But it isn’t just the company’s wealth that disposes the jury to bend the law. It is also the company’s arrogance and unresponsiveness. In a typical case, the evidence that the company’s emissions caused the plaintiff’s illness is weak, but the evidence is pretty strong that the company didn’t care enough about its emissions and their possible health effects. The plaintiff’s attorney works hard to keep the jury outraged at the company’s cavalier attitude. The defense attorney, on the other hand, may not have much of a strategy for addressing the jury’s outrage, preferring to stick to causation.

Juries sometimes have the will power to be outraged at a defendant and nonetheless reject the plaintiff’s claims on technical grounds. But unless a case is ironclad, it’s not a good thing to count on. That leaves two options for addressing the outrage. The defense can try to persuade the jury to abandon its outrage. Or the defense can concede the outrage and the behavior that has led to it, and work to mitigate it. The latter is usually wiser. Essentially, a jury that feels it must “prove” the defendant merits its outrage (because the defense hasn’t conceded as much) may well find for the plaintiff for that purpose alone. (There is a third option: Ignore the jury’s outrage, make a strong technical case, lose at the trial level, and appeal.)

Outrage management can also have a decisive influence on how evidence is presented. For example, it is standard courtroom tactics to acknowledge negatives you can’t avoid, and to do so proactively rather than waiting for the other side to nail you with them in cross-examination. (It surprises me how often my clients and their attorneys won’t let me do the same thing outside the courtroom.) But this principle is typically not extended to expert testimony. There is very good reason to believe that an expert witness who says X is about 75% right – right about A and B and C but not about D – is going to be more credible on X’s behalf than one who claims X is 100% right. And the worst of all experts is the one who claims on direct examination that X is 100% right, then on cross-examination reluctantly concedes the 25% where X may well be wrong. Yet attorneys spend a lot of time negotiating with expert witnesses, trying to find compromises between the expert’s two-sided judgment and the attorney’s preference for one-sided testimony. My complaint here isn’t about ethics. It’s about effectiveness. One-sided arguments work fine with uninterested publics. Attentive stakeholders – juries, for example – are much better persuaded by two-sided arguments.

This is especially true if the argument is coming from the defense. In general, exaggeration is an excellent strategy for exacerbating outrage, but a poor strategy for mitigating outrage. In or out of the courtroom, the side trying to get people riled up will find it useful to overstate its case as much as ethics, law, and credibility permit. The side trying to get people calmed down, on the other hand, will find it useful to stake out the middle ground. A well-fought controversy is normally a fight between one extreme (argued by the get-’em-outraged side) and the middle (argued by the calm-’em-down side).

Conceding one’s opponents’ strongest arguments makes sense, in short, when the audience is paying close attention to both sides or when your side is the one trying to reduce the audience’s outrage. If you’re defending a tort case before a potentially outraged jury, both criteria are met; conceding the plaintiff’s good (and provable) arguments should be a no-brainer.

I understand some of the reasons why lawyers often ignore this advice. A defense attorney hoping to succeed with a summary judgment motion, for example, will need to argue that there is no way a reasonable juror could find in the other side’s favor. The motion is helped by a thoroughly one-sided expert report, undercut by a balanced report. If the motion fails, of course, my reasoning explains why a two-sided expert would be more credible on the witness stand. But the expert is stuck with that one-sided report.

Regulatory law is even more influenced by outrage than courtroom outcomes are. Juries and judges confront one case at a time, and their key decisions are dichotomous: guilty or not guilty. But regulators confront cluttered desks piled high with far more cases than they have the resources to pursue. Like prosecutors and the plaintiff bar, they have to pick – and naturally they tend to pick the lowest-hanging fruit. Once they decide to pursue a particular case, moreover, regulators are the proud possessors of “regulatory discretion” – a far-from-dichotomous range of possible actions from the very tough to the very lenient.

What determines which cases the regulator chooses to go after, and how harshly the regulator decides each case? Certainly the regulator’s assessment of the seriousness of the hazard is one key factor. So is the law. But just as important is community outrage, often expressed through political pressure. When stakeholders are angry and upset, and have built up a head of steam and attracted the attention of politicians, regulators take notice. They may well look for a regulatory rationale to do what outraged stakeholders want them to do … even if the technical risk is small. But when stakeholders are calm and politicians are uninterested, regulators are far less likely to overreact to a small technical risk.

Unless, of course, the regulators themselves are outraged. I remember a phosphate industry client that was surprised when a state environmental regulator came down hard on what seemed to be a minor infraction, even though stakeholder outrage was low. “What’s your prior experience with this guy?” I asked. “Not much,” my client answered. “He was involved a few years ago when we had a pretty significant accident, but we didn’t like where he was going with it and we managed to get the case kicked upstairs to headquarters, so he wasn’t really very involved.” In other words, my client went over the local regulator’s head back then … and now it’s payback time.

Whether the outrage in question is the regulator’s, the public’s, the jury’s, the plaintiff’s, or the defendant’s, the point is the same: Managing a legal controversy usually entails managing outrage. Some lawyers are naturally good at it. Some aren’t. Few realize there’s actually a field there from which they could benefit.

What Are the Genuine Areas of Conflict Between Law and Outrage Management?

I have identified some areas where I think outrage management approaches can be useful to lawyers. There are also areas where the conflict is genuine. I want to discuss five: ignorance, silence, candor, apology, and tone.

I think the conflict is less than lawyers tend to suppose. Nonetheless, the conflict is real. In all five areas, good outrage management poses some risk of damaging your legal position. In all five areas, your lawyer is likely to take that risk as definitive, paying little if any attention to the counterbalancing reputational benefit. In all five areas, you would be wise to listen to both your lawyer and your outrage manager, then craft a middle position that neither will find wholly comfortable.

Ignorance

As I write this column, the news is full of stories of Martha Stewart’s well-timed sale of ImClone stock. The legal question is whether she had insider information when she gave the sell order. If she knew ImClone was about to get bad news from the FDA, then she broke the law when she sold her stock. If she suspected there might be bad news coming, but didn’t actually know, then she didn’t break the law. So if she did suspect the truth, it would have been legally unwise of her to confirm her suspicions before acting on them. She was (or would have been) better off not knowing.

In law it is often genuinely useful to be ignorant. Prior to the passage of SARA Title III – the law requiring companies to compile and publish an annual Toxics Release Inventory – most companies had little idea what wastes they were emitting to air, land, and water. In many cases their lawyers urged them not to find out. If they knew, the lawyers reasoned, they might have to tell. The information might be discoverable in a lawsuit; they might have to notify environmental regulators, making the information vulnerable to a later Freedom of Information Act request; they might even have an affirmative obligation to inform employees, neighbors, or others at risk. Better not to know. After the law was passed, of course, not knowing was no longer an option. Although the law doesn’t require companies to reduce their emissions, just to measure and report them, once the information was out there most companies were embarrassed into significant reductions. In a surprising number of cases the reductions were not only inexpensive, but even profitable; once they were required to know what they were emitting, they found cost-effective ways to emit less. So knowledge may have turned out useful to the companies … but at least in legal terms ignorance was the safer option until knowledge was required.

Perhaps the most important area where legal factors encourage corporate ignorance has to do with uncertain evidence of possible risk. Any company with potentially risky products or processes is bound to run periodically into information suggesting a possible problem: a weird complaint from a customer, perhaps, or an anomalous finding in an otherwise benign piece of research. The evidence isn’t persuasive, only suggestive. In a previous column devoted to this problem, I called such pieces of evidence “Yellow Flags.”

Yellow flags raise two dilemmas for companies: whether to investigate them further and find out if they’re actually green or red; and whether to tell stakeholders about them. As I argued at length in the previous column, from an outrage management point of view you’re far better off revealing the yellow flags, and then investigating them jointly with your stakeholders. From a hazard management point of view, you’re better off investigating them, whether you reveal them or not. But from a legal point of view, you may be better off keeping them secret and uninvestigated.

Silence

When a controversy goes public, one of the most common things to read in the newspaper or see on TV is that the company “declined to comment because of pending litigation.” After seeing or hearing this hundreds of times, you may imagine there is some rule prohibiting companies from commenting on issues that are being litigated.

There isn’t. With the exception of relatively rare gag orders imposed by a judge, litigants are free to comment publicly. When your lawyer tells you not to do so, he or she is trying to control what’s being said. Maybe the lawyer doesn’t want your side in the controversy to talk at all; maybe the lawyer wants to be the one doing the talking. This isn’t necessarily a mistake. The company’s public comments can affect how the judge, jury, plaintiff, and witnesses view the case; in some situations the company’s public comments may become evidence themselves. Your lawyer has a legitimate stake in what you say. And silence is a legitimate option, sometimes the wisest option … especially the legally wisest option. In the world of litigation defense, everything that is communicated will be grist for the plaintiff lawyers’ mill, and silence may indeed be golden.

But there are other stakes at stake. A newsworthy lawsuit isn’t just a lawsuit; it is also a public controversy. Winning the lawsuit and surviving the controversy are not unrelated, but they’re not the same thing either. It matters how the controversy affects your reputation with the general public; it may matter even more how the controversy affects your reputation among customers, employees, suppliers, shareholders, neighbors, and other stakeholders. These audiences are probably more affected by the news coverage of the lawsuit than by the lawsuit itself. Deciding what to say to the media, in short, is a public relations and stakeholder relations question as much as it is a question of lawsuit management. And the different concerns may genuinely lead to different recommendations.

Lawyers are especially likely to counsel silence when it comes to the question of whether to communicate directly with litigants. Literally dozens of times in my consulting, I have had clients tell me they’re “not allowed” to talk to the neighborhood (or the employees, customers, etc.) because of pending litigation. I’ve even had clients tell stakeholders, “If you file a lawsuit we won’t be able to keep negotiating.”

Once again your lawyer may have good legal reasons to prefer that you not talk to the other side. But it is neither illegal nor unethical for you to do so. And oftentimes it is extremely useful. While you would be unwise to communicate with litigants (who also happen to be stakeholders) without consulting your attorney first, you would be equally unwise to let your attorney impose a rigid gag rule on your communications with stakeholders (who also happen to be litigants).

I want to be careful here. Having accused lawyers of giving communication advice, I want to be sure not to give legal advice. So don’t count on me to tell you what’s legal and what isn’t. I’m not an attorney. But as attorneys have explained the matter to me, the only person who isn’t allowed to talk to the plaintiff is the defendant’s lawyer … not the defendant. An important principle of legal ethics specifies that one side’s lawyer may not communicate with the other side except through that side’s lawyer. If you’re getting a divorce, your lawyer can’t telephone your spouse without the permission of your spouse’s lawyer. But you can.

In 1990 I worked (briefly) on a huge Superfund cleanup case. Dozens of major companies had disposed of hazardous waste at the site, so for convenience the biggest companies involved had authorized a committee of attorneys to manage the issue for them. The committee hired me to advise on ways to reduce outrage among site neighbors; since there were a number of tort class actions pending, the neighbors were also litigants and potential litigants. Inevitably, just about everything I recommended required communications with the neighborhood: acknowledging all that had gone wrong, apologizing, listening to concerns and reproaches, collaborating on cleanup plans, etc. “We can’t do any of that,” I was told. “We’re not entitled to communicate with plaintiffs except through their attorneys – and the attorneys are not likely to cooperate with any effort to ameliorate their clients’ outrage.” I asked the obvious question: “Could your companies themselves communicate directly with the neighbors?” The committee of lawyers reluctantly agreed that this would be legal, but pointed out that the companies had appointed the committee to manage the issue. “Well, then,” I said, “shouldn’t you advise your clients that putting you in charge was a mistake, that there are important steps to be taken that you cannot ethically take but they can?” I wasn’t invited back.

Of course even if I’m right that you are entitled to communicate with the plaintiffs (though your lawyer isn’t), that doesn’t mean that it’s wise to do so. What it does mean is that your lawyer may not want you to do so whether it’s wise or not. You might say something that provokes new plaintiffs to sue and makes it easier for all plaintiffs to win. On the other hand, you might say something that reduces the outrage of plaintiffs and prospective plaintiffs, making the former more interested in settling and the latter less interested in suing. (It might even be the same thing.) And when you talk and listen to the neighborhood you’re not just talking and listening to plaintiffs and prospective plaintiffs. You’re talking and listening to your neighbors. Ameliorating neighborhood outrage is important to you for reasons other than winning, settling, and preventing lawsuits.

There are no guarantees. In general, communication is more outrage-reducing than silence. But some of what you may be tempted to say could damage your legal prospects and exacerbate stakeholder outrage.

The point is that your lawyer will probably want you to do as little communicating with the neighborhood as possible. Your outrage manager will want you to do as much as possible. The conflict is genuine. You’re going to have to listen to both sides and steer your own course.

Candor

Let me start with secrets – actual secrets. A secret is something nobody knows, and nobody is likely to find out unless you tell. If it’s illegal to keep the particular secret, your lawyer will presumably make you tell. If it’s legal, your lawyer may well recommend that you not tell. What’s called for in this latter case is a fairly simple cost-risk calculation. Information that reflects badly on your organization does a lot more reputational damage if you keep it secret and someone else eventually blows the whistle than if you reveal it promptly yourself. I don’t have data on exactly how much more damage it does, but the rule-of-thumb estimate I like to offer my clients is this: Figure 20 times as much reputational harm if you get outed by someone else than if you out yourself. Or to put the point a different way, in the typical scandal one-twentieth of people’s outrage is about what you did, and nineteen-twentieths is about the coverup. Ask Nixon, or Clinton, or Ken Lay.

It follows that secrecy is a good bet only if you can achieve a 95% record for keeping secrets permanently. If your average is lower than 95%, then you’d be wiser to blow the whistle on yourself every time.

Now I happen to believe that few if any organizations manage to keep 95% of their secrets. But of course I see a biased sample of corporate secrets: The ones that got outed are far likelier to come to my attention than the ones that are still secret. You know better than I do how many successful secrets litter your filing cabinets. Bottom line: You and your lawyer are more qualified than I am to determine which secrets you ought to keep and which ones you ought to reveal. My only contribution is to remind you of that “20 times” rule of thumb. If you can imagine people finding out on their own later, you probably should tell them yourself now. And don’t fool yourself into assuming that the secret will lose potency over time. Investigative reporters and plaintiff attorneys do very well with decades-old secrets. Ask the tobacco industry, or the nuclear weapons testing people, or the Catholic bishops.

When I urge candor on my clients, I’m not usually talking about an actual secret. I’m talking about a “sort-of secret” – something that’s already in the public domain but hasn’t been talked about much. Maybe it has been reported to the regulators, but not to the neighborhood. Maybe it’s in Appendix Six of your report, but not in the executive summary or the press release. Maybe it’s in an internal document that’s discoverable. Maybe it was even public knowledge once, but that was a long time ago and most folks have forgotten. In all these situations, you have no further legal (or ethical) obligation to tell; you already told.

Notice that in all these situations there isn’t much legal reason not to tell either. The information is out there where the other side (plaintiffs, activists, whoever) can get it. When your opponents do their due diligence, they’ll have it. Your lawyer isn’t about to let you deny it in court anyway.

Yet most attorneys – not all, but most – steadfastly advise their clients not to be candid in such situations. Of course there’s always a possibility the other side will overlook your sort-of secret. From a strictly legal standpoint, even a longshot chance of keeping an embarrassing piece of information out of the trial record may be a shot worth taking. And there are some lesser legal advantages to not being candid. Instead of serving up juicy tidbits on a silver platter, for example, you can make the other side work harder and spend more finding them. (To some lawyers their client is “the alleged XYZ Corporation.” Why admit the company name when you can force the plaintiff to prove it?)

But for purposes of managing stakeholder outrage, keeping these sort-of secrets is absurd. Real secrecy, I tell my clients, may be a bad bet but it isn’t insane. What’s insane is to act as if a sort-of secret were still a secret. That has the disadvantages of candor (the secret is out) combined with the disadvantages of secrecy (you look like you’re not telling). In stakeholder relations, there are only two viable options with respect to information that reflects badly on you: Keep it secret (really secret) or wallow in it. The third option of telling the truth once and then pretending you didn’t isn’t much of an option. If you’re not keeping your misbehavior secret, your best bet is to dwell on it, endlessly, until your stakeholders are sick of hearing about it – not until you are sick of talking about it, which happens much too quickly. Never be the one to say, “It’s time to put that behind us.”

In all fairness, it isn’t just lawyers who advise their clients to tell the truth just once. This is also pretty common and pretty reasonable public relations advice. Remember, PR assumes an audience that isn’t paying much attention. The odds aren’t bad that the public won’t pick up on that embarrassing piece of information the first time it’s said … so saying it just once isn’t crazy. But stakeholders differ from publics in that they’re paying a lot of attention. They are far more likely to dig out that piece of information, and they’ll blame you for not having emphasized it more. Bottom line: If your focus is law or PR, it may make sense to keep these not-really-secret secrets. If your focus is stakeholder outrage, it doesn’t.

But candor isn’t just about whether you admit the truth never or once or often. It’s also about whether you give a truthful impression. And here again, lawyers and PR people are likely to be on one side, outrage managers on the other. In fact, I think it is fair to say that technically accurate but misleading information is a common outcome when lawyers and PR people collaborate on public statements.

I have hundreds of examples – and virtually every consultation provides more – but my all-time favorite comes from the 1979 Three Mile Island accident. The nuclear power plant in central Pennsylvania was in deep trouble. The emergency core cooling system had been mistakenly turned off; a hydrogen bubble in the containment structure was considered capable of exploding, which might breach the core vessel and cause a meltdown. Many things were going wrong, when Metropolitan Edison issued a statement reporting that the core was “cooling according to design.” Months later I asked a MetEd executive how he could justify such a statement. Nuclear plants are designed to survive a serious accident, he explained. They are designed to protect the public even though many things are going wrong. So even though many things were going wrong at TMI, the plant was, nonetheless, “cooling according to design.”

Technically accurate but misleading statements, like questions of what the meaning of “is” is, may or may not lead to a legally successful defense. Either way, they won’t deter stakeholder outrage. In fact, stakeholders are more outraged, not less, when they find that your misleading statements aren’t illegal, that you found a loophole that let you mislead them without actually lying. Deception that turns out to be legal makes us all feel stupid, vulnerable, unprotected … and very angry.

Apology

So if outrage management is your goal, you need to concede the bad news candidly – which means often, not just once; and in language that is genuinely clear, not just technically accurate. But even that’s not enough. You need to be apologetic as well.

An earlier column was devoted exclusively to “Saying You’re Sorry.” In a nutshell, you start by specifying what you did (that’s the candor part). Then you shut up and let us berate you. Then you apologize – which includes showing that you wish it hadn’t happened, showing that you sympathize with those who were damaged, and above all showing that you feel responsible for your share of the blame. Later steps in the process of forgiveness include taking action so it won’t happen again, compensating victims, and finally doing some sort of penance.

But it’s the candor and the apology that most stick in lawyers’ craws … and the apology even more than the candor. There is a real legal risk to apologizing. Some sorts of apologies, in some jurisdictions, can be construed as admissions of liability. If your lawyer intends to deny liability, the wrong apology can undercut your case.

Your insurance company’s lawyer is even less likely than your own lawyer to let you apologize – which makes sense, since your insurance company is worried exclusively about claims and lawsuits, and not about your overall reputation. (Some insurance policies are automatically voided if the insured company makes a public statement admitting liability.) Years ago, I was involved in a food poisoning controversy in the U.S. where the restaurant’s insurance company wouldn’t let it apologize for contaminated and undercooked meat, insisting that it blame the supplier instead. And last year I worked on a railway accident in the U.K. where the railway company’s insuror vetoed an apologetic letter to passengers; the insurance company was worried that an apology might provoke greedy passengers to file claims, but it wasn’t so worried that the absence of an apology might provoke outraged passengers to file claims. In both cases, I think the insurors and their lawyers were wrong strictly in terms of claims and lawsuits. But I’m not certain. I am certain they were wrong in terms of overall corporate reputation and management of stakeholder outrage.

Outside the legal arena, of course, apologizing usually diminishes outrage. (It does that even inside the legal arena, and thus can reduce the victim’s impetus to sue and the jury’s impetus to award punitive damages.) In the nonlegal world we don’t especially interpret apologies as admissions of liability. When you are jostled in a crowded elevator, step back in order not to fall, and find yourself stepping on the toe of the person behind you, “I’m sorry” is considered the correct thing to say, not “I was jostled.” When you’re late getting home from work because of a traffic jam, you apologize for being late before you complain about the traffic. In fact, when you are partially to blame for a bad outcome, the more you blame yourself the less the rest of us blame you. This is an example of what I call “the seesaw of risk communication” (See “Advice for President Bartlet: Riding the Seesaw.” ) Ambivalent audiences focus on the side of the ambivalence (the seat on the seesaw) that the source seems to be neglecting. Every parent knows that when our children are apologetic we’re inclined to forgive them; when they’re unrepentant we’re determined to punish them. In outrage management terms, scapegoating is a bad move, and so is stonewalling; apologizing is likely to turn out better. But in legal terms, apologizing may be construed as acknowledging fault, and that could be disastrous.

There is usually a way to apologize that won’t turn out disastrous. You can’t find it without your lawyer’s help, but it probably won’t be your lawyer’s first choice. Not too long after the Exxon Valdez catastrophe, British Petroleum had an oil spill near Huntington Beach, California. Media interest was intense because of Valdez, and media access was a lot handier. Importantly, the tanker that spilled BP’s oil was owned by a contract carrier, not BP. BP therefore had a possible legal defense; it could argue that it was the victim of the spill (“the sonofabitch spilled our oil”), not the perpetrator. As the CEO of BP America flew to the scene, his lawyers counseled him to be sure not to say anything that might undercut this defense. Whatever you do, the lawyers said, don’t admit legal responsibility. The CEO’s communication advisors had a different perspective. It’s our oil that spilled, they said, on its way from our well to our refinery. If we hide behind the fact that it was a contract carrier and give the impression we’re denying any responsibility, we’ll make the outrage far worse. It’s essential to take moral responsibility.

Soon after the CEO got to the scene, a journalist asked the key question: Do you consider this spill your company’s fault. His answer: “Our lawyers tell us it’s not our fault. But we feel like it’s our fault, and we’re going to act like it’s our fault.” This was a superb answer. The lawyers went home saying, “Thank God he said it’s not our fault.” The defense was preserved. But millions of viewers who saw the sound bite on television said to themselves, “I can’t believe the CEO of an oil company is taking moral responsibility for a spill.” Most importantly, residents of the Huntington Beach area were inclined to forgive the company – and six months after the spill BP’s reputation in Southern California had rebounded to better than pre-spill levels. This is not chiefly because BP handled the cleanup well, which it did, but because it handled the apology well – and it did so without any increase in liability.

If you have never heard of the Huntington Beach oil spill, that’s pretty much the point. Lower stakeholder outrage made for less long-term media coverage, fewer lawsuits, and quicker reputation recovery.

BP’s strategy of apologizing without acknowledging liability is a winner, and I have advised scores of clients to go and do likewise. But the availability of viable compromises doesn’t mean there’s no underlying conflict. At bottom, companies often need to seek forgiveness for bad acts, or at least for acts that led to bad outcomes. Forgiveness requires contrition, and contrition implies some acknowledgment that you realize you should have acted differently. Listening and cleaning up and making sure it doesn’t happen again will all help reduce the outrage, even without a good apology. But a good apology will help a lot too. And unless you’re very careful, a good apology really can constitute a legal catastrophe.

Tone

When push comes to shove, you may decide that you have to give your lawyer veto power over which facts you concede and which you keep secret or sort-of secret; when you apologize and when you scapegoat or stonewall. I wish you wouldn’t. I’ve tried to make a case in this column that you shouldn’t. But with a huge lawsuit looming or potentially looming, it’ll take a lot of courage to defy your attorney in the interests of something as long-term and airy-fairy as outrage management.

At least defy your attorney on tone. “I feel terrible about what happened” means the same thing as “The company regrets any inconvenience that may have been caused.” The only difference is that the first sounds genuinely apologetic and the second sounds like it was written by a lawyer. There is nothing to be gained, in the courtroom or anywhere else, by letting your lawyer make you write the second instead of the first.

I think I understand some of the forces that lead attorneys to produce abstract, polysyllabic, pompous prose. I even understand that sometimes wording can make all the difference, whether the document is a contract or a neighborhood newsletter. But law is all about content, while outrage and reputation are largely about tone. So let your outrage managers establish a tone that is candid, apologetic, human, morally responsive. And let your lawyers make sure the content doesn’t give away the store.

Copyright © 2002 by Peter M. Sandman

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