Legal or Reputation Damage: Which Crisis Threat is Worse?

Crumpled Reputation

How planning helps you make the right call when the worst happens

A large and well known movie house chain recently found itself facing reputation headwinds, despite having won a long running court case – which, one would think, should have been good publicity. Right?The legal victory was the denial of a series of lawsuits filed by the families and victims of a mass shooting that had taken place at one of the chain’s locations. The lawsuits alleged the movie house should have had better security in place to prevent such shootings.

All the suits failed, including one where the jury deemed that the lack of guards and alarms played no significant role in the shooting.

So far, so good. It was what happened next that brought the barrage of criticism and bad publicity.

The movie chain sued the families and victims for the legal costs the chain had incurred its defense, a reported total of around $700k.

It had the legal right to do so. But it did not have to do so.

The chain enjoyed earnings of more than $180m in the first quarter of 2016.

The optics of a large "rich" company suing shooting victims and their families for money is awful.

So, despite the fair and hard earned defense in court, the company still lost.

I have no first-hand knowledge of the decision-making at the movie house chain. But after 25 years of working with organizations facing crises, I know how judgements forged in the heat of a crisis war room can miss the mark when exposed to the harsh scrutiny of the media and victims of the crisis.

And bad judgement often happens when the legal argument prevails too strongly over the need to do the right thing for the company’s reputation.

At the heart of reputation lies trust. Once that trust is damaged, it takes a long time to repair – and no amount of legal victories will help.

In the most effective crisis responses, legal and reputation considerations are carefully balanced. The ramifications for each, short and long term, are carefully examined before decisions are made.

You cannot do all this thinking ahead of time but you can do some of it. Which is another reason why having an up-to-date crisis response plan, easily accessible 24/7 on a smartphone app and supported by a team which has rehearsed good decision-making in drills and workshops is a must-have for any organization.

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