Top Ten Tips on How to Manage a Company Crisis
Ninth Tip : Response to Law Enforcement/Regulatory Agency
Expert panelists at the MSBA Legal Summit recently discussed the Top Ten Tips on How to Manage a Company Crisis. The program was moderated by Marisa Trasatti, Esquire, partner at Wilson, Elser, Moskowitz, Edelman & Dicker, LLP. The top ten tips on how to manage a company crisis were identified by the panel of crisis experts:
- Determine What Activates the Crisis Management Plan (Before the Crisis)
- Formulate the Crisis Management Team
- Assess the Crisis
- The Initial Response
- Manage the External Appearance: Public Relations, Media, and Customers
- Manage the Internal Appearance – Advising Employees and Communicating with Key Opinion Leaders
- Adjust the Company’s Promotional & Sales Practices
- Response to Regulatory/Law Enforcement
- Concluding the Plan
Last week we discussed the importance of adjusting the company’s promotional and sales practices. The panelists urged the crisis management team to work with outside counsel to determine whether a crisis affects their company’s promotional and marketing materials. If so, determine whether the materials should be suspended for a period of time or whether it is safe to adjust the materials as soon as practicable. This week we will be discussing the ninth of the above ten tips that the experts identified on how to manage a company crisis.
Upon learning about a law enforcement or regulatory agency inquiry, the crisis management team should review the issue and ensure that the company has a lawyer with expertise in the particular substantive area. It may be necessary to hire outside counsel or several outside counsels to assist the company.
Robert Scott, Jr., partner at Wilson, Elser, Moskowitz, Edelman & Dicker, LLP advised that a litigation hold should be issued to pertinent custodians of records within the company directing them to preserve written and electronically stored information of potentially relevant evidence in anticipation of future litigation. Nothing could be worse than the discovery by law enforcement or a regulatory agency that documents were destroyed, inadvertently or otherwise. Plus, “the fact that documents were destroyed has a very negative impact in the press,” he said. The crisis management team should ensure immediate implementation of the litigation hold.
Mr. Scott also indicated that documents relevant to the inquiry need to be reviewed quickly by the company’s counsel for several reasons. One, the documents will help form the narrative that the company is trying to get out to the public, but you want a “lawyer in charge of the review so that you can maintain the privilege nature of the documents,” said Mr. Scott. Second, “it is critical that your initial messaging is consonant with the company’s eventual response to the regulatory or law enforcement agency.” After the full review, counsel can begin crafting a response to the regulatory or law enforcement inquiry.
The crisis management team should document the deadline to respond to law enforcement or the regulatory agency and ensure the response is timely submitted. Before drafting the response, Ms. Trasatti advised determining “what the regulatory body will consider, who will review the submission, the background of the reviewers, and the leadership and the focus of the agency under such leadership.” Another good idea is to review “industrywide responses to similar crises,” she said. Don’t forget that the regulatory body and law enforcement will be reviewing the same documents, so it is critical that the crisis management team ensure all documents relevant to the crisis are reviewed before the response is submitted.
In sum: The crisis management team should ensure that the company has a lawyer with the particular expertise required for the type of crisis. Issue a litigation hold to the company’s custodians of records. Review all documents before any initial response is issued by the company (Tip Number Four) and before a formal response is submitted to the regulatory or law enforcement agency. Respect the deadline for submitting a response. Do your homework before submitting the company’s formal response by looking at industry and competitor responses, leaders in the agency, etc.
You may watch the ninth tip on how to manage a company crisis below:
This article is the eleventh of a 13-week part series that will discuss in detail how counsel can help their clients create a crisis management strategy and manage a company crisis. Last week, the MSBA discussed the eighth of ten tips on how to manage a company crisis. Next week, the MSBA will discuss the tenth tip on how to manage a company crisis with comprehensive suggestions and actions for implementation. The immediate next week we will provide a comprehensive summation of all the myths and tips including the advice and counsel of the professional panelists listed below. In week one of the series, the MSBA generally discussed the top ten tips on how to manage a company crisis. Week two was a detailed summary of the 7 myths of a company crisis. Some of the material to support this article was taken from “Top Ten Steps in Managing a Company Crisis,” by Marisa A. Trasatti, Zachary A. Miller and Sean M. Fox. The MSBA wishes to express sincere gratitude to the professional panelists, without whom it would not be possible to offer this series.
Join us in the coming weeks as we continue to cover in detail the Top Ten Tips in Managing a Company Crisis.
Aaron C. Burton, CEO of Sciton, Inc. Sciton, Inc. is the largest privately held dermatological and medical device laser manufacturer. Aaron shared his experience as CEO and especially the crisis that developed at Sciton during his first year. Aaron also generously shared how Sciton handled and endured the COVID crisis.
Linda Lenrow Lopez, Director of Operations, Risk Alternatives, L3 Management Innovations, LLC. Linda has more than 25 years of experience in private and non-private sector risk management. Linda shared her experience as a project manager and Director of Operations at Bechtel Corporation. Other roles Linda served at Bechtel include corporate risk manager for a global business unit and project risk manager. Linda currently works at L3 Management Innovations and draws upon her years of professional experience in this area to share with the group.
Robert E. Scott, Jr., partner at Wilson, Elser, Moskowitz, Edelman & Dicker, LLP. Robert handles litigation on insurance coverage, drug and medical devices and many other areas. Robert shared his expertise on crisis management and his insights on planning ahead to control future crises.
Sam Terzich, Gallagher Bassett. Sam is a current director of the company and manages specialty claims including product liability, cyber, environmental, pollution and product recall. Sam has been in the claims industry for 25 years and will address the insurance issues that arise during a company crisis.
Marisa Trasatti, Esquire, partner at Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, and also General Counsel to Sciton, Inc. Marisa is the moderator of the Top Ten Tips to Manage a Crisis. Marisa shares her unique experiences of managing a crisis as General Counsel for Sciton along with valuable lessons learned as counsel for an organization in the midst of a crisis. Marisa’s practice focuses primarily on civil litigation, with an emphasis on product liability litigation, including cases involving drugs and medical devices. She is a past president of Maryland Defense Counsel and served as the DRI Maryland State Representative.