Don’t Leave Your Corporate Reputation in the Hands of Congress

Pandemic-related liability protections currently under consideration in Congress as part of the next potential coronavirus relief bill could reduce certain types of litigation risk, but legislation alone cannot address the effects of damaging legal allegations at a time of heightened public scrutiny. As they consider how best to navigate uncertain times, corporate leaders should be mindful of the role effective communications can play in defending their reputations and valuations in these circumstances — each of which can be defined as much by the “court of public opinion” as the court of law. Companies should be prepared to manage perceptions and defend against allegations outside the courtroom, as even allegations that aren’t legally credible can damage stakeholder perceptions.

As of Labor Day, 12 states have acted to limit liability for employers from litigation relating to COVID-19 exposure, and more than a dozen others are considering similar laws or gubernatorial orders. Meanwhile, as the coronavirus continues to spread across the United States, a fifth coronavirus relief bill to address the national response to the pandemic and its economic fallout is under consideration by Congress. Central among the questions lawmakers are considering as Senate proceedings resume are the merits of liability protections.

The contours of this debate are predictable.

Republicans, with the support of pro-business trade groups, see liability protection as an essential component of an effective reopening and have declared that no bill will pass the Senate without including such protections. Democrats, with the support of consumer advocates and the trial bar, have bristled at reducing employer liability.

As our colleague observed in May, heightened interest from the media and other stakeholders, a flood of pandemic-related lawsuits against companies, and corporate efforts to carve out liability protections means that strategic communications are more critical than ever to reducing an organization’s risk of liability and reputational damage. A contentious debate in Washington only exacerbates this dynamic.

To assess litigation risk companies should closely assess the proposed legislation’s specific provisions and plan for how corporate operations, policies and procedures will be affected. Lawsuits related to the pandemic are already mounting.  Employees and unions are challenging return-to-work policies in court, and companies are disputing supply chain disruptions, contract issues and failed transactions as parties cite force majeure clauses claiming material adverse effects. These lawsuits would not be covered by the liability protections currently proposed and all have significant potential to cause disruption to and diminish the reputations of the involved businesses.

Regardless of their legal exposure, companies must demonstrate that they are taking safety seriously and they should communicate the specific actions they are taking, with plenty of time to address questions. Stakeholders want to feel protected and informed, underscoring the need for both effective implementation and well-managed communications. Companies seeking to avoid costly litigation have to communicate those steps clearly and effectively, and in a manner that doesn’t complicate potential future litigation. Should the need arise, effective litigation communications ensure that companies set the narrative before it is set for them by opposing litigants or by the media, while also supporting the core litigation strategy. Research has shown, for example, that the doctors sued the most for malpractice aren’t the relatively small number of negligent doctors but rather those with the worst bedside manner. That lesson is instructive here.

In a March interview with CNBC, billionaire investor Marc Cuban predicted that “how companies treat employees during this pandemic will define their brand for decades.” Ultimately, pandemic liability protections might shield companies from certain types of costly litigation and the risk of associated damages, fines and penalties, but they can’t and won’t inoculate companies from lasting damage to their corporate reputations and valuations. Regardless of what national legislation is advanced, if any, effective strategic communications are vital, now more than ever.

James Bourne is a Vice President at Abernathy MacGregor, where he provides strategic communications counsel to clients helping them develop and implement communications strategies that resonate with the audiences that matter. He advises clients how to tell their stories, engage their audiences and counter their critics as they face complex litigation, mergers & acquisitions, executive transitions, governance issues, shareholder activism, and crisis preparedness and response.

Sarah Knakmuhs is a Managing Director and Head of the D.C. Office at Abernathy MacGregor, where she helps companies solve complex public policy and public affairs issues. Sarah has a track record of quickly and successfully developing innovative, strategic solutions in challenging situations. She regularly works with a diverse group of stakeholders including elected officials, the investment community, international partners, regulatory officials and the media.

Mike Hotra is a Managing Director at Abernathy MacGregor, where he counsels clients communicating around public affairs issues and opportunities in Washington, D.C. and in the states. In addition to his substantial public affairs and issue advocacy background, Mike also has significant experience representing clients in high profile litigation and government investigations. Over the course of his career, he has advised numerous clients on how to prepare for crises, mitigate risk and rebuild reputations.

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