Legal 911: Effective
Response to the Corporate
Crisis
March 11, 2014
Chris Schaeper Greg Meece
Thompson & Knight LLP
Jessica Roper
Shell Oil Company
Today’s Agenda
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Recognizing the Corporate Crisis
Goals of Effective Crisis Management
•
Planning for the Corporate Crisis
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Preserving the Privileges
•
•
Document and Record Preservation
PR, Communication and Reporting
2
Legal 911: Effective Response to the
Corporate Crisis
Recognizing the
Corporate Crisis
3
Recognizing the
Corporate Crisis
Types of Crises
• Something explodes
• People get hurt
• Product is recalled
• Government comes calling
• Adverse legal result
• Severe financial distress
• Security breach
4
Recognizing the
Corporate Crisis
The First Signs of Trouble
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The accident or injuries
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Unfavorable press
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Product recall
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Governmental investigations
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Whistleblower complaint
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The call in the middle of the night
5
Recognizing the
Corporate Crisis
Is it really a crisis?
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How many people are affected
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Magnitude of the problem
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How much is the potential liability
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How much revenue is at stake
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Could someone go to jail?
•
Potential damage to the corporate brand
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Adverse Publicity
6
Recognizing the
Corporate Crisis
Common stress points at the beginning of the
crisis
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Surprise – caught off guard
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Inadequate information
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Initial biases and assumptions
•
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Events seemingly beyond control/taking on a life of
their own
Intense scrutiny from outside the company
7
Recognizing the
Corporate Crisis
If not handled properly, the crisis can lead to . . .
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Siege Mentality
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Panic
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Decision-making paralysis
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External distrust
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Internal demoralization
8
Legal 911: Effective Response to the
Corporate Crisis
Goals of Effective
Crisis Management
9
Goals of Effective
Crisis Management
Short-Term
•
Stabilize the environment
•
Addressing immediate needs
•
Keep from saying/doing anything you’ll regret
later
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Goals of Effective
Crisis Management
Long-Term
•
Minimizing liability
•
Mitigating damage to the brand
•
•
Maintaining the corporate structure insofar
as is possible
Learning lessons
11
Legal 911: Effective Response to the
Corporate Crisis
Planning for the
Corporate Crisis
12
Planning for the
Corporate Crisis
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Have a plan
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Have a team
•
Have a strategy
•
Clearly define roles and responsibilities
•
Remain flexible
13
Planning for the
Corporate Crisis
The Crisis Management Plan
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•
•
Is it in writing?
Do people know about it? Do they know
they’re on the team?
Have you walked through how it will work?
14
Planning for the
Corporate Crisis
The Crisis Management Team
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•
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Management
Legal
Public Relations
HR
•
•
•
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Finance
Operations
Technical
IT
Risk Management
The “face of the company”
15
Planning for the
Corporate Crisis
The Crisis Management Team
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•
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Lines of Report
External contact
Plan “B”
Secure, effective communication among the
team
16
Planning for the
Corporate Crisis
External to the Team
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Key or interested personnel
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Board Members
•
Outside Legal Counsel
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PR Management
•
Insurance
•
Governmental Affairs
•
Investor Relations
17
Preserving the
Privileges
18
Preserving the Privileges
•
•
When responding to a crisis, don’t forget the
basic rules.
Goal should be to preserve the privilege over
as much of the investigative communications
as can legitimately be claimed.
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20
Preserving the Privileges
• Attorney–Client Privilege
• Work Product Doctrine
21
Attorney–Client Privilege
•
Federal
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No Federal rule that sets forth the definition of the
attorney–client privilege. Rather, Federal Rule of
Evidence 501 provides that the common law,
governs the claim of privilege unless provided
otherwise by the U.S. Constitution, Federal
Statute or rule prescribed by the Supreme Court.
However, in a civil case in which state law
governs the claim or defense, look to state law to
define the privilege.
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23
Attorney–Client Privilege
•
Texas
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In Texas, the attorney–client privilege is governed by Texas Rule of Evidence
(“TRE”) 503, which provides as follows:
TRE 503
(b) Rules of Privilege.
(1) General rule of privilege. A client has a privilege to refuse to disclose and to
prevent any other person from disclosing confidential communications made for the
purpose of facilitating the rendition of professional legal services to the client:
(A) between the client or a representative of the client and the client’s lawyer or a
representative of the lawyer;
(B) between the lawyer and the lawyer’s representative;
(C) by the client or a representative of the client, or the client’s lawyer or a
representative of the lawyer, to a lawyer or a representative of a lawyer representing
another party in a pending action and concerning a matter of common interest
therein;
(D) between representatives of the client or between the client and a representative
of the client; or
(E) among lawyers and their representatives representing the same client.
24
ATTORNEY–CLIENT PRIVILEGE
•
Texas
–
In Texas, the attorney–client privilege is governed by Texas Rule of Evidence
(“TRE”) 503, which provides as follows:
TRE 503
(b) Rules of Privilege.
(1) General rule of privilege. A client has a privilege to refuse to disclose and to
prevent any other person from disclosing confidential communications made for
the purpose of facilitating the rendition of professional legal services to the client:
(A) between the client or a representative of the client and the client’s lawyer or a
representative of the lawyer;
(B) between the lawyer and the lawyer’s representative;
(C) by the client or a representative of the client, or the client’s lawyer or a
representative of the lawyer, to a lawyer or a representative of a lawyer
representing another party in a pending action and concerning a matter of
common interest therein;
(D) between representatives of the client or between the client and a
representative of the client; or
(E) among lawyers and their representatives representing the same client.
25
Attorney–Client Privilege
•
TRE 503(a) provides the definitions that are relevant for determining the privilege.
TRE 503
(a) Definitions. As used in this rule:
(1) A “client” is a person, public officer, or corporation, association, or other organization or entity
either public or private, who is rendered professional legal services by a lawyer, or who consults a
lawyer with a view to obtaining professional legal services from that lawyer.
(2) A “representative of the client” is (i) a person having authority to obtain professional legal
services, or to act on advice thereby rendered, on behalf of the client or (ii) any other person who, for
the purpose of effectuating legal representation for the client, makes or receives a confidential
communication while acting in the scope of employment for the client.
(3) A “lawyer” is a person authorized, or reasonably believed by the client to be authorized, to
engage in the practice of law in any state or nation.
(4) A “representative of the lawyer” is:
(A) one employed by the lawyer to assist the lawyer in the rendition of professional legal
services; or
(B) an accountant who is reasonably necessary for the lawyer’s rendition of professional legal
services.
(5) A communication is “confidential” if not intended to be disclosed to third persons other than
those to whom disclosure is made in furtherance of the rendition of professional legal services to the
client or those reasonably necessary for the transmission of the communication.
26
Attorney–Client Privilege
a) TRE 503(a) provides the definitions that are relevant for determining the privilege.
TRE 503
(a) Definitions. As used in this rule:
(1) A “client” is a person, public officer, or corporation, association, or other organization or entity
either public or private, who is rendered professional legal services by a lawyer, or who consults a
lawyer with a view to obtaining professional legal services from that lawyer.
(2) A “representative of the client” is (i) a person having authority to obtain professional legal
services, or to act on advice thereby rendered, on behalf of the client or (ii) any other person who,
for the purpose of effectuating legal representation for the client, makes or receives a confidential
communication while acting in the scope of employment for the client.
(3) A “lawyer” is a person authorized, or reasonably believed by the client to be authorized, to
engage in the practice of law in any state or nation.
(4) A “representative of the lawyer” is:
(A) one employed by the lawyer to assist the lawyer in the rendition of professional legal
services; or
(B) an accountant who is reasonably necessary for the lawyer’s rendition of professional
legal services.
(5) A communication is “confidential” if not intended to be disclosed to third persons other than
those to whom disclosure is made in furtherance of the rendition of professional legal services to
the client or those reasonably necessary for the transmission of the communication.
27
Attorney–Client Privilege
•
•
Communications between a client and outside
counsel are generally presumed to be
privileged.
However, communications between a client and
in–house counsel are not generally presumed to
be privileged. Why? Because of the multiple
roles that in–house counsel often occupy within
their organization, not all of which involve the
rendering of legal advice.
28
Work Product Doctrine
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Tex Rule Civ. Proc. 192.5(a) provides the current definition of work
product, which replaced the old attorney work product and party
communication exemptions.
192.5 Work Product.
(a) Work product defined. Work product comprises:
(1) material prepared or mental impressions developed in
anticipation of litigation or for trial by or for a party or a
party’s representatives, including the party’s attorneys,
consultants, sureties, indemnitors, insurers, employees, or
agents; or
(2) a communication made in anticipation of litigation or for
trial between a party and the party’s representatives or
among a party’s representatives, including the party’s
attorneys, consultants, sureties, indemnitors, insurers,
employees, or agents.
29
Work Product Doctrine
•
Tex Rule Civ. Proc. 192.5(a) provides the current definition of
work product, which replaced the old attorney work product and
party communication exemptions.
192.5 Work Product.
(a) Work product defined. Work product comprises:
(1) material prepared or mental impressions developed in
anticipation of litigation or for trial by or for a party or a
party’s representatives, including the party’s attorneys,
consultants, sureties, indemnitors, insurers, employees, or
agents; or
(2) a communication made in anticipation of litigation or for
trial between a party and the party’s representatives or
among a party’s representatives, including the party’s
attorneys, consultants, sureties, indemnitors, insurers,
employees, or agents.
30
Work Product Doctrine
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•
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Tex. Rule Civ. Proc. 192.5(b) provides that core work
product is never discoverable, but other work product
may be discoverable upon a showing that the party
seeking discovery has a “substantial need” for the
information and that the party is unable to obtain the
material by other means without undue hardship.
Core work product is the attorney’s mental
impressions, opinions, conclusions or legal theories.
Non core work product is everything else.
31
Work Product Doctrine
•
•
Thus, potentially, the work product
privilege can protect information not
otherwise protected by the attorney–client
privilege.
However, the vast majority of that
information will fall into the parameter of
non–core work product, and, thus, is
potentially discoverable under Rule
192.5(b).
32
What Can Be Done to
Protect the Privileges?
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Clients should make a clear request for legal advice.
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Avoid sending mixed purpose e–mails.
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Mark communications as privileged and confidential.
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When clients are sending e–mails to in–house
counsel, only have the lawyers listed in the “To” field,
and the non–lawyers as “cc’s.”
In–house counsel’s advice should not be broadly
disseminated.
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DOCUMENT AND
RECORD
PRESERVATION
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Document and Record
Preservation
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Why is it important to make sure that any
policies regarding preservation of
documents, including electronic documents,
are followed?
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In addition to other reasons, to avoid the
dread spoliation of evidence allegation in any
subsequent litigation
36
Document and Record
Preservation
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What is spoliation of evidence?
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Spoliation is defined as “the improper
destruction of evidence” relevant to a case.
Clements v. Conrad, 21 S.W.3d 514 (Tex.
App. Amarillo 2000)
37
Document and Record
Preservation
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In Texas, there are three elements which courts
look at to determine whether a spoliation
presumption can be used.
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Whether the accused party had a duty to preserve
the evidence;
Whether the accused party negligently
intentionally spoliated the evidence; and
or
Whether the spoliation prejudiced the other
party’s ability to present its case or defense.
38
Document and Record
Preservation
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The duty to preserve evidence may arise from a statutory,
regulatory or ethical duty to preserve evidence.
“While a litigant is under no duty to keep or retain every
document in its possession . . . it is under a duty to
preserve what it knows, or reasonable should know, is
relevant in the action, is reasonably calculated to lead to
the discovery of admissible evidence, is reasonably likely
to be requested during discovery [or] is the subject of the
pending discovery sanction.”
Trevino v. Ortega, 969
S.W.2d 950, 958 (Tex. 1998)(Baker, J. concurring).
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Document and Record
Preservation
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In Texas, the presumption is raised only when
evidence has been intentionally or negligently
destroyed, not merely lost.
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Note, however, that you generally will not be able to use
as an excuse a document destruction policy that calls for
the deletion of electronic information after a certain
period of time if the court determines that the company
should have suspended such automatic deletion after it
knew or reasonably should have known that there is a
substantial chance that a claim will be filed and that such
evidence would be material.
40
Document and Record
Preservation
What should in–house counsel do?
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•
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Issue a hold letter whenever litigation is reasonably
anticipated. The hold should be reissued periodically,
so that new employees are aware of it and all employees
are reminded of their duties.
In–house counsel should communicate directly with key
players to make sure that all relevant evidence is
maintained.
In–house counsel should make sure that all back–up
media which the party has a duty to retain is identified
and stored in a safe place.
41
Document and Record
Preservation
Remedies for Spoliation
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Sanctions
Presumption read to the jury that the jury may
presume that the missing evidence would have
been unfavorable to the destroying party.
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PR,
COMMUNICATION
AND REPORTING
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PR, Communication and
Reporting
Who’s Listening?
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The Press
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The Government
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Plaintiff’s Bar
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Watchdog groups
•
Employees
45
PR, Communication and
Reporting
Guidelines for all communications
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Speak with one voice
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Consistent message
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Say what you know, don’t speculate
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Admit what you don’t know (just yet)
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Fix it, don’t apologize
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Never ever fudge the facts
46
PR, Communication and
Reporting
Talking to the Press
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Avoid the “No Comment”
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Avoid “Being unavailable for comment”
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The reporter: Friend or Foe?
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Deadlines, deadlines, deadlines
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Correcting the record (on p. 26, Section B, in small print)
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Press Releases
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PR, Communication and
Reporting
Internal Communications
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Employees
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Customers/vendors
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Crisis management team
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Outside advisors (legal, accounting, PR)
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Key persons relevant to the crisis
48
PR, Communication and
Reporting
Social Media?
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Pushing out the message
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Monitoring
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Responding
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PR, Communication and
Reporting
Government Reporting
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SEC (public companies)
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Other governmental constituencies
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Legal 911: Effective Response to the
Corporate Crisis
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