A very public falling out: Legal issues of internal conflict being played out in the media

Hannah Clipston and Tom Barnard

Objectives

• Common reputation crisis scenarios

• How the law can help

• How the law can’t help

• Practical pointers

Reputation

• “The beliefs or opinions that are generally held about someone or something” – usually as a result of a lot of hard work…

• Core to an organisation’s success and value

• “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently”

(Warren Buffett)

Common scenarios

• Potentially damaging information about the organisation has been uncovered internally

• A journalist or reporter intends to expose damaging information –internal conflict as to how to deal

• Damaging statements are published about the organisation

• A disgruntled ex-employee, member or other individual threatens to publish a defamatory statement about the organisation

• A disgruntled individual or employee threatens to publish or use confidential information about the organisation

Scenario 1: Damaging info uncovered

• Effective policies in place? – whistleblowing / disciplinary / employment contracts?

• Contain/investigate/formulate strategy

• Assuming true/may be true, damage limitation

• Statement(s) (concise and to the point)

• Anticipate need for further statements

• Decisive action/positive campaign

Damage limitation

“We have uncovered a serious issue and have responded accordingly. The Chairman and I have acted quickly to establish a comprehensive independent investigation. The Board, my colleagues, our customers and I expect Tesco to operate with integrity and transparency and we will take decisive action as the results of the investigation become clear.”

(Dave Lewis, Chief Executive of Tesco 22/9/14)

Scenario 2 :Press to expose damaging information

• New UK regulator for newspaper and magazines – IPSO• Administers Editors’ Code of Practice• Not all major publications have joined

• Ofcom regulates TV and radio• Code of practice – principles of fairness

– Rule 7.1 Broadcasters must avoid unfair or unjust treatment of individuals or organisations in programmes

– List of practices to be followed

• Engage but operate with caution – beware “off the record”• Use best communicators • Proceedings after the event ?

Scenario 3:Damaging statement published

• Defamation– A statement which is published to a third party which contains an

untrue imputation which harms the claimant’s reputation – Common law, Defamation Act 1952 and Defamation Act 1996, plus– Defamation Act 2013 for publications post 1 January 2014– Serious harm test: publication has caused or is likely to cause serious

harm to the reputation of the claimant (s1(1)) DA 2013– Harm to the reputation of a body that trades for profit is not serious

harm unless it has caused or is likely to cause the body serious financial loss (s1(2)) DA 2013

– Early days. First case on proper determination of “serious harm” Cooke –v- MGN [2014] EWHC 2831 (QB). Leave to appeal to C.A. granted.

– Remedies: damages/final injunction– Pre-action Protocol for Defamation

Scenario 3 continued

• Passing off

– Goodwill or reputation attached to and recognised by the public as distinctive of claimant’s products/services

– Misrepresentation by defendant leading the public to believe that its products/services are in fact those of the claimant – deception

– Damage or likely damage

– Remedies : interim injunction/damages or an account of profit/final injunction

Whatever the cause of action, commercial reparation of the damage to reputation should be considered as early as possible

Scenario 4: Threat by individual to publish defamatory statement

• Interim injunctive relief is rare in defamation cases • In order to succeed, strong prima facie evidence must

be put forward by the applicant that the statement is defamatory and untrue

• Interim relief will be refused if the respondent intends to plead justification or privilege or honest comment

• Objective assessment of potential damage to reputation

• Engagement can be counter-productive• Prepare the reactive statement • Prepare to take action

Scenario 4: Threat by individual to publish defamatory statement

• Interim injunctive relief is rare in defamation cases • In order to succeed, strong prima facie evidence must

be put forward by the applicant that the statement is defamatory and untrue

• Interim relief will be refused if the respondent intends to plead justification or privilege or honest comment

• Objective assessment of potential damage to reputation

• Engagement can be counter-productive• Prepare the reactive statement • Prepare to take action

Scenario 5: Threat to publish confidential information

• Effective policies and definition around what is “confidential information”• Well drafted employment contracts/ NDAs and other commercial

agreements• Breach of confidence – required elements:

– Information must be confidential to the claimant– Information must have the necessary quality of confidence – Information imparted to the defendant in circumstances containing an

obligation of confidence – Defendant is (using or) threatening to use the information without the

claimant’s permission to the claimant’s detriment

• Interim injunctive relief: American Cyanamid– Claimant must demonstrate a strong arguable case– Would damages be an adequate remedy – Balance of convenience– Cross undertaking in damages

Is your organisation as prepared as it can be?

• Who are the fixers?

• Culture and awareness

• Effective policies

• Well drafted commercial contracts/ NDAs and employment contracts

• IT Security and storage of information

• Media training

Reputation crisis managed

Case Study

Reputation crisis managed

Questions