In recent years many investors have lost significant sums via a range of investments, products and tax avoidance schemes recommended to them by advisers. These investors may well have the potential to bring legal claims. However some may have been deterred from doing so by concerns about adverse publicity if the choice of investment or fund reflects badly on them.
So what are the reputational implications for taking such matters to court and how can they be managed?
High profile commercial litigation in a public forum conflicts with the natural desire of many wealthy investors to protect reputation and maintain privacy. For those investors for whom discretion is key, looking for ways of resolving the dispute without recourse to litigation is likely to be their priority. However, sometimes litigation is impossible to avoid and the scale of losses may be too great to resolve the dispute without bringing proceedings. In such cases, the potential reputational fall-out has to be considered at the outset and a strategy put in place for dealing with issues as the case progresses. For investors with global interests, cultural and political factors may play a part in strategy.
Parties to litigation may try to damage the other side’s reputation or reputational damage may be collateral to the litigation. The fear of a publicly fought case can be a strong incentive not to sue, as parties are reluctant to have dirty laundry aired in public. Reputational dangers can lurk at every stage of the litigation process. In a defence to claims of this sort, the opponent may lay the blame at the door of particular individuals. Disclosure rules mean that internal communications that parties may prefer to keep under wraps may be read out in court. Witnesses can speak their mind with impunity in court and journalists are free to report fairly and accurately what goes on in court and witnesses can take advantage of this. It is not enough to focus on winning a case; reputations can be damaged regardless of the outcome.
Reputational risk cuts both ways and both sides’ point of view have to be considered in determining litigation and reputational strategy. An awareness of reputational vulnerabilities may prove helpful in securing early resolution.
It is best to ensure that those pursuing the commercial litigation on your behalf properly understand your concerns and have the necessary skills to set up and implement a pro-active reputation management strategy, using Public Relations advisors if that is appropriate. The lawyers should consider the scope of the claim to narrow the issues, avoid areas of sensitivity, safeguard commercially sensitive information where possible and keep your wider interests in mind.
Once proceedings are underway in high profile litigation, journalists will ask questions. It is important to engage with them. Answering journalists’ questions needs to be done in a way that gets the key message across. Using commercial litigators with an appreciation of how the media operates is likely to represent a significant advantage in managing the reputational risks associated with litigation.
For further information or advice, please contact Claire Gill.