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Companies typically take measures to mitigate risks, but that does not render them immune from sudden crises. Prompt and appropriate action is critical to managing unexpected challenges, but many attorneys do not know how to help their clients navigate catastrophic events. On July 15th, the MSBA presented the 2021 Legal Summit Series: Top 10 Steps to Manage a Company Crisis. The presentation discussed measures attorneys can take to prepare clients for and handle emergency situations and when they arise. The program was presented by Linda Lenrow Lopez, Director of Operations, Risk Alternatives at L3 Management Innovations, LLC, and moderated by Marisa Trasatti, Esq., Wilson Elser Moskowitz Edelman & Dicker LLP. It also featured Robert E. Scott, Jr., Esq. of Wilson Elser Of Counsel,  Sam Terzich, Executive Vice President, Gallagher Bassett, and Aaron C. Burton, CEO, Sciton. 

Marisa noted that many people believe that crises are always negative to one’s own business and that a competitor’s crisis is good for business, which she believes is a myth. She stated that there are other myths regarding what to do in a crisis, such as refusing to address the crisis with the media, and relying on the government for help. 

The panelists then set forth the critical steps for managing a crisis. Before a crisis happens, a company should develop a crisis management plan, so they are not inventing the wheel when a crisis hits. They should also determine what constitutes a crisis and therefore activates the plan, and formulate a crisis management team. The panelists noted that different teams may be necessary to address different types of crises, but certain individuals, like the CEO and communications manager, should always be involved. Each team should have a leader, who is organized and ensures that the necessary steps are taken. In many instances, internal and external crisis management teams are necessary. 

Once a crisis hits, the team must assess the situation. First, a business must evaluate the risks presented by the crisis. They must also obtain information regarding what happened and when, who it affected, and what led to the crisis, and categorize the nature of the crisis. If the crisis is ongoing, they must also determine how to stop it.

The next step is to make an initial response to the crisis. Parties should be prepared to address questions from impacted parties, and potentially the government and media, and analyze what the financial effects will be and whether the crisis will harm their reputation. Transparent communication is essential, as is the planning, implementation, and prioritization of remediation efforts. 

After the initial response is made, companies dealing with crises should determine whether they have insurance coverage for any losses or potential claims. Companies should notify their insurance carriers promptly when a crisis occurs, not only to address the present issue but also concerns that may arise in the future as a result of the crisis. If an insurance carrier denies a company’s claim, the company may need to retain coverage counsel to determine if the denial was proper. 

Companies should then focus on managing their appearance, both externally and internally. Public relations companies can aid companies in protecting or repairing their public image, and taking proactive steps can allow companies to control the narrative and frame the message. Regarding the internal message, it is important to advise employees regarding the company’s official standpoint on the crisis and provide enough detail to answer questions and address employee concerns.  Companies should then suspend their promotional materials until they are certain of how the crisis will affect their marketing going forward and hone the message they want to send after the crisis. They must also retain and collect any documents or materials needed to respond to regulatory or law enforcement entities, and being certain to redact any privileged information. 

The presentation will be available on the MSBA CLE catalog.