Litigation Is No Reason To Say ""No Comment""

By Bill Furlow

Furlow Corporate Communications

In our litigious society, most of us realize that lawsuits are part of the cost of doing business. They also represent one of the most common sources of negative publicity for companies and institutions.

Without regard to the merits of a suit, the allegations contained in a complaint can be extremely damaging to an institution's reputation if not adequately refuted. Somehow, though, many business executives have gotten the idea that if a suit has been filed - or even if one is likely to be filed - the company can't or shouldn't say anything about it.

We constantly read news reports about lawsuits in which the defendant company is quoted as saying something like, ""We can't comment on that because it's in litigation.""

Well, why not? Do executives think readers and viewers don't believe the accusations made in lawsuits? Or that a lawsuit magically provides a protective shield for their company's reputation. I don't think it works that way.

Attorneys often counsel clients not to talk about the allegations contained in lawsuits for fear something they say will come back to haunt them later. But the trial, if the case goes that far, will be months or years in the future. People reading the news story about the suit will be influenced by it today. Another reality is that the dismissal or settlement of a lawsuit - even a defense judgment in court - usually does not get the same level of media attention as the filing of the suit.

I often ask audiences during speaking engagements how they react to reading that someone accused of doing something wrong or harmful has refused to comment. ""Guilty!"" is always the response that comes back. If you're going to say ""no comment,"" you might as well just say ""guilty,"" because that's the way people will read it.

Another corporate statement we often see in news reports of lawsuits is, ""We haven't seen the complaint yet, so we can't comment."" That reads exactly the same as ""no comment"" to me. No, you should not speak specifically about a complaint you haven't seen. You can, however, ask the reporter seeking comment to first fax you a copy of the complaint. And, you can always speak to policy rather than to the specifics of the suit.

For example, when a woman claimed she found a dead mouse pressed into a half-eaten loaf of bread, the spokesperson for the bakery talked about the process of baking and packaging the bread: ""It's virtually impossible that a mouse could have been wrapped into a loaf of bread in our bakery,"" he said. ""Each loaf passes through a high-speed automatic slicer and an automated wrapper..."" How different than just saying, ""We haven't seen the complaint.""

When PacifiCare was sued for false advertising and unfair business practices, the CEO told a reporter the company had not yet been served with the suit and had not had a chance to review the allegations. ""However,"" he said, ""this is one of the many lawsuits filed recently against HMOs, and it's unfortunate that trial lawyers are taking steps to drive up health-care costs for consumers by forcing unwarranted, costly and protracted litigation.""

That kind of comment causes the reader to at least consider that there might be another side to the story than that being told by the plaintiff.

On the other hand, when the former Tinseltown was sued by nine employees for refusing to stop blatant sexual harassment by a supervisor, including obscene demands for sex, the Orange County Register said the company's attorney ""said the case is being litigated but declined to comment further."" You can draw your own conclusions - the readers certainly will.

Sometimes a company winds up in the news because of something an employee is accused of doing unconnected to the business. In these situations, it is important not to make comments that effectively convict the person in the press, but at the same time a spokesperson should give the company's position. When a high-flying Silicon Valley executive was charged with using the Internet to solicit sex with a minor, the spokesperson for his employer, Infoseek, said, ""We are deeply shocked and disturbed by this. We are looking into the matter.""

If a newspaper is going to write about a lawsuit, it is vitally important that the defendant's story be told in that first article. In a recent high-profile situation with seriously negative potential for my client, I literally heard a lawyer suggest that we wait four or five days after the initial media disclosure before commenting. The delay would give us a chance to better understand the situation and get our act together, he said.

That kind of thinking can be devastating to a company's reputation. Most readers and viewers will make up their minds about a story as soon as they read or see it. Follow-up stories typically don't get the same kind of prominent play or consumer interest.

While the lawyer was giving that horrible advice to several of my client's executives listening on a speaker phone, I noticed a paperweight on the desk we were huddled around. When the phone call ended, the CEO asked my opinion. I picked up the paperweight and showed him the words written there. ""You never get another chance to make a good first impression.""

A cliché perhaps, but true - even when you're the subject of a lawsuit.

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In a Crisis, Don't Clam Up for Fear of Liability

During times of crisis, executives and attorneys often decide not to comment for fear their statements will be used against them later in lawsuits. But these points should be remembered:

· Liability is usually not the only issue; loss of sales, strain on important relationships and damage to your reputation also are risks.

· The lawsuits will be resolved months or years in the future; the court of public opinion will judge you immediately.

· People form lasting impressions about companies in crisis; make sure you're acting out of your best instincts.